Objective: To solve a decision making problem (Make or buy). An electronic component making unit is investigating the decision whether to make or buy 7000 transistors, which are currently being purchased at RO 36 OMR each. The decision to manufacture in-house costs the company an annual fixed cost of RO 50,000 towards purchase of machines. Variable costs are estimated at RO 28 per unit. Decide on the part to make or buy by calculation and graph. Determine BEP both by calculation, and graph. Total cost to produce: Total cost = Fixed cost + Variable cost x Quantity Total cost to buy: Total cost = Cost /unit x Quantity The decision: Break Even Point (BEP): Let x be the quantity of production. At BEP, Total cost to make = Total cost to buy Graphical solution Demand (D) Cost of production(OR) F.C+ V.C x Qty Cost of Buying(OR) Cost/unit x Qty Qty Conclusions: Break Even Analysis(Graph)