a) Should Hahn make rather than buy?

Hahn should _ the components, saving $__ per year as compared to the other decision. (Enter your response rounded to the nearest whole number.)

b) What is the break-even quantity?

c) What percent discount would make "buy" better than "make"?

Hahn Manufacturing purchases a key component of one of its products from a local supplier. The current purchase price is $1,350 per unit. Efforts to standardize parts succeeded to the point that this same component can now be used in five different products. Annual component usage should increase from 150 to 900 units. Management wonders whether it is time to make the component in-house, rather than to continue buying it from the supplier. Fixed costs would increase by about $30,000 per year for the new equipment and tooling needed. The cost of raw materials and variable overhead would be about $1,000 per unit, and labor costs would be $250 per unit produced. Hahn Manufacturing purchases a key component of one of its products from a local supplier. The current purchase price is $1,350 per unit. Efforts to standardize parts succeeded to the point that this same component can now be used in five different products. Annual component usage should increase from 150 to 900 units. Management wonders whether it is time to make the component in-house, rather than to continue buying it from the supplier. Fixed costs would increase by about $30,000 per year for the new equipment and tooling needed. The cost of raw materials and variable overhead would be about $1,000 per unit, and labor costs would be $250 per unit produced