Scenario 2.6 You Currently Purchase a Part Used in Your Production Process

Multiple Choice

Scenario 2.6
You currently purchase a part used in your production process from an outside supplier, and have decided to begin making this part in-house. You have two equipment options for moving production in-house: special-purpose equipment and general-purpose equipment. Cost information for these two options is as follows:

-Use Scenario 2.6 to answer this question. What are total costs under the Special-Purpose Equipment option for an annual quantity of 40,000 units?

A) $400,000
B) $500,000
C) $800,000
D) $850,000