Question: Only solve letter C. Hahn Manufacturing purchases a key component of one of its products from a local supplier. The current purchase price is $1,700

Only solve letter C.Only solve letter C. Hahn Manufacturing purchases a key component of one

Hahn Manufacturing purchases a key component of one of its products from a local supplier. The current purchase price is $1,700 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 $75,000 per year for the new equipment and tooling needed. The cost of raw materials and variable overhead would be about $1,200 per unit, and labor costs would be $350 per unit produced. a. Should Hahn make rather than buy? Hahn should the components, saving $60000 per year as compared to the other decision. (Enter your response rounded to the nearest whole number.) b. What is the break-even quantity? The break-even quantity is units. (Enter your response rounded to the nearest whole number.) c. What other considerations might be important? Since Hahn would be ordering 900 units instead of 150, they can count on a discount from the supplier. The discount of at least \$ would make the "buy" decision better than the "make" alternative. (Enter your response rounded up to the next whole number.)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!