### Considering producing gear assembly-cross-over point

Assignment Help Operation Management
##### Reference no: EM13845281

A company is considering producing a gear assembly that it now purchases from a supplier. The supplier charges \$4 per unit, with an additional one-time payment of \$8,000 units. The company estimates that it will cost \$15,000 to set up the process and then \$1.5 per unit for labor and materials.

What is the cross-over point? Please provide the formula, at least one step of calculation, and the correct answer for full credit.

If the expected production volume is 5,000 units, which option gives a lower total cost? Please provide at least one step of calculation and the correct answer for full credit.

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