A firm is considering the “make vs. buy” question for a subcomponent. If the part is made in-house, the production data would be: first cost = $350, 000; annual costs for operation = $45, 000; salvage value = $15, 000; project life = 5 years; interest = 10%; and material cost per unit = $8.50. If annual production is 10,000 units, the maximum amount that the firm should be willing to pay to an outside vendor for the subcomponent is nearest? (a) $10 per unit (b) $16 per unit (c) $22 per unit (d) $28 per unit?

A firm is considering the “make vs. buy” question for a subcomponent. If the part is made in-house, the production data would be: first cost = $350, 000; annual costs for operation = $45, 000; salvage value = $15, 000; project life = 5 years; interest = 10%; and material cost per unit = $8.50. If annual production is 10,000 units, the maximum amount that the firm should be willing to pay to an outside vendor for the subcomponent is nearest? (a) $10 per unit (b) $16 per unit (c) $22 per unit (d) $28 per unit?

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter4: Economic Evaluation In Health Care

Section: Chapter Questions

Problem 7QAP

See similar textbooks

Similar questions

The costs of producing a certain commodity consist of 125.00 per unit for labor and material cost and 320.00 per unit for other variable cost. The unit can be sold at 1,200.00. If the production capacity per month is 5,200 units, what maximum fixed amount can the company spend each month of breakeven? Answer: 3,926,000.00 Explain every process.
A company has determined that the price and the monthly demand of one of its products are related by the equation D = √(400 − p), where p is the price per unit in dollars and D is the monthly demand. The associated fixed costs are $1,125/month, and the variable costs are $100/unit. Use this information to answer, Which of the following values of D represents the breakeven point? (a) 10 units (b) 15 units (c) 20 units (d) 25 units.
Help....... Solve Write Company has a maximum capacity of 200,000 units per year. Variable manufacturing costs are $12 per unit. Fixed overhead is $600,000 per year. Variable selling and administrative costs are $5 per unit, and fixed selling and administrative costs are $300,000 per year. The current sales price is $23 per unit. A. What is the breakeven point in (a) sales units and (b) sales dollars? B. How many units must the Write Company sells to earn a profit of $240,000 per year?
Point F indicates _____? A) where the cost per unit is at a minimum;B) where the AVC is at a minimum;C) where the ATC is at a minimum;D) where the MC is maximum;E) none
Economic cost is equal to the sum of exiplicit and implicit costs. True/ False
A publisher for a promising new novel figures fixed cost (overhead advances promotion copy editing typesetting, and so on) at $63,000 and variable cost (printing paper binding shipping) at $2.70 for each book produced if the book is sold to distributors for $11 each, how many must be produced and sold for the publisher to break even break even. Round to nearest integer as needed.
A corn refining company produces corn gluten cattle feed at a variable cost of $83 per ton. If fixed costs are $120,000 per month and the feed sells for $134 per ton, how many tons should be sold each month to have a monthly profit of $570,000? The company must sell tons. (Round to the nearest whole number as needed.)
A toy manufacturer uses 63,000 rubber wheels per year for its popular dump truck series. The firm makes its own wheels, which it can produce at a rate of 1000 per day. The toy trucks are assembled uniformly over the entire year. Carrying cost is $.90 per wheel per year. Setup cost for a production run of wheels is $35. The firm operates 240 days per year. Determine the following: a. Optimal run size b. Minimum total annual cost for carrying and setup c. Cycle time for the optimal run size d. Run time
What is the total costing based on the following shipment? Dimensions: Weight: 4 pieces, 70 in L x 100 in W x 5 in H each piece. 100 kg each piece. Chargeable weight: 400 kg. Total charges CPT CDG airport, Paris, France Origin pick up fee: Origin handling fee: CAD $0.20/kg CAD $0.20 x 400 = CAD $80.00 CAD $45.00 /shipment CAD $45.00 CAD $45.00 Origin terminal handling charges: CAD $0.04/kg CAD $0.04 x 400 = CAD $16.00 NavCan surcharge: B13A Export Declaration: CAD $0.07/kg CAD CAD $0.07 x 400 = CAD $17.50/shipment CAD $28.00 CAD $17.50 Air freight: $17.50/shipment CAN $4.40/kg Fuel surcharge: CAD $0.15/kg CAD $4.40 x 400 CAD $0.15 x 400 CAD $1,760.00 CAD $60.00 Security surcharge: CAD $0.08/kg CAD $0.08 x 400 CAD $32.00 TOTAL $2,040.50 $2,038.50 $2,006.50 $2,667.47
Company E manufactures regulators at a labor cost of $90 per unit and material cost of $300 per unit. The fixed charges on the business are $15,000 per month and the variable costs are $20 per unit per month. If the regulators are sold to retailers at $600 each, how many units must be produced and sold per month to breakeven?
Barney need to choose between two equipment for his project. Equipment A: First cost = 200,000.00, Annual Operating Cost = 32,000.00 , Annual Labor Cost = 50,000.00 , Property taxes = 3%, Payroll taxes = 4%, Estimated life = 10 years. Equipment B: First cost = 300,000.00, Annual Operating Cost = 24,000.00 , Annual Labor Cost = 32,000.00 , Property taxes = 3%, Payroll taxes = 4%, Estimated life = 10 years. If the minimum required rate of return is 15%, what is the equivalent uniform annual cost of Equipment B? a. P126,070 b. P124,030 c. P129,850 d. P130,870
The cost of producing a computer diskette is as follows: Material cost is $7.00 each, labor cost is $2.00 each, and another expense is $1.50 each. If the fixed expenses are $69,000/month, how many diskettes must be produced each month for break even if each diskette is worth $250?