Video Excel Online Actvity: Break- Even Analysis Suppose that a manufacturer nee

Question

Video Excel Online Actvity: Break- Even Analysis Suppose that a manufacturer needs to produce a custom aluminum housing for a special customer order Because it currently does not have the equipment necessary to make the housing, it would have to acquire machines and tooling at a fixed cost (net of salvage value after the project is completed) $50,000. The variable cost of production is estimated to be $10 per unit. The company can outsource the housing to a metal fabricator at a cost of $24 per unit. The customer order is for 10,000 units. What should it do? The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Questions 1. What is the total in-house production cost? Round your answer to the nearest dollar 2. What is the total outsourced cost? Round your answer to the nearest dollar 3. What is the cost difference (in-house- outsourced)? Round your answer to the nearest dollar. Use the minus sign to enter a negative difference, if any. 4. To obtain the lowest produxction cost, should the company manufacture the part in-house or outsource the part? Check My Work Reset Problem M score ts (0%) Back earch

Explanation / Answer

Total in house production cost $150,000 (50000+(10000*$10) Total outsourced cost $240,000 ($24*10000) Cost difference (Inhouse- outsourced) ($90,000) Optimal Decision INHOUSE 1 Total in house production cost $150,000 2 Total outsourced cost $240,000 3 Cost difference (Inhouse- outsourced) ($90,000) 4 To obtain lowest production cost, the company should produce INHOUSE

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