LAMIKA Inc. is a multi-product company that currently manufactures 30,000 units of part JADA each month...

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LAMIKA Inc. is a multi-product company that currently manufactures 30,000 units of part JADA each month for use in the production of its main product. The facilities now being used to produce JADA have fixed monthly cost of P150,000 and a capacity to produce 84,000 units per month. If LAMIKA were to buy JADA from an outside supplier, the facilities would be idle, but only 60% of its fixed costs would continue. The variable production costs of part JADA are P11 per unit. If LAMIKA is able to obtain part JADA from an outside supplier at a unit purchase price of P12.875, the monthly usage at which it will be indifferent between purchasing and making part JADA is? LAMIKA Inc. is a multi-product company that currently manufactures 30,000 units of part JADA each month for use in the production of its main product. The facilities now being used to produce JADA have fixed monthly cost of P150,000 and a capacity to produce 84,000 units per month. If LAMIKA were to buy JADA from an outside supplier, the facilities would be idle, but only 60% of its fixed costs would continue. The variable production costs of part JADA are P11 per unit. If LAMIKA is able to obtain part JADA from an outside supplier at a unit purchase price of P12.875, the monthly usage at which it will be indifferent between purchasing and making part JADA is?

Answer rating: 100% (QA)

Solution Indifferent point between manufacturing and buying from outside Let the no of unit x Buyi... View the full answer