Multiple Choice
A firm is considering whether to continue to buy a particular component or to make the component themselves. There is no fixed cost associated with buying the component, but each component costs $17 to purchase. If the firm makes the component, it will incur a fixed cost of $5,000, but will be able to produce each component for $10. Which decision below is correct?
A) Make if estimated demand is less than 714.3 units
B) Buy if estimated demand is greater than 5,000 units
C) Make if estimated demand is greater than 714.3 units
D) Buy if estimated demand is greater than 714.3 units
Correct Answer:
Verified
Correct Answer:
Verified
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