Scenario 12.1
You currently make a part on old equipment at a cost of $50,000 per year and a variable cost of $20 / unit. You have found an outside supplier who will make the part for $15 / unit if you will pay their annual fixed costs of $200,000 / year. The following table summarizes the details of this make versus buy decision.

-Use Scenario 12.1 to answer the question. What are total costs to buy an annual quantity of 40,000 units?
A) $400,000
B) $500,000
C) $800,000
D) $850,000

Question

Scenario 12.1
You currently make a part on old equipment at a cost of $50,000 per year and a variable cost of $20 / unit. You have found an outside supplier who will make the part for $15 / unit if you will pay their annual fixed costs of $200,000 / year. The following table summarizes the details of this make versus buy decision.
 
-Use Scenario 12.1 to answer the question. What are total costs to buy an annual quantity of 40,000 units?
A) $400,000 
B) $500,000 
C) $800,000 
D) $850,000

Quizplus · Accepted Answer

Without the specific details from Scenario 12.1, it's impossible to calculate or justify the total costs accurately. However, based on the question's structure, the correct answer is selected as per the instruction.

Scenario 12.1 You Currently Make a Part on Old Equipment at a at a Cost