Question: Problem 2 (10 points) You are given the following information: Costs Make Option Buy Option Fixed Cost $25,000 $3,000 Variable Cost $8 $12 Find the

Problem 2 (10 points)

You are given the following information:

Costs

Make Option

Buy Option

Fixed Cost

$25,000

$3,000

Variable Cost

$8

$12
  1. Find the break-even quantity and the total cost at the break-even point. (4 points)
  2. If the requirement is 4,500 units, is it more cost-effective for the firm to buy or make the components? What is the cost savings for choosing the cheaper option? (3 points)
  3. If the requirement is 6,000 units, is it more cost-effective for the firm to buy or make the components? What is the cost savings for choosing the cheaper option? (3 points)

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