Business, 27.06.2019 00:00 jadahilbun01

Hahn manufacturing purchases a key component of one of its products from a local supplier. the current purchase price is $1,500 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 in- crease from 150 to 750 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 in- crease by about $40,000 per year for the new equipment and tooling needed. the cost of raw materials and variable over- head would be about $1,100 per unit, and labor costs would be $300 per unit produced. 1. should hahn make rather than buy? 2. what is the break-even quantity? 3. what other considerations might be important show any and all work as that is really needed to understand the principles.

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