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A manager is trying to decide whether to purchase a certain part or to have it produced internally. Internal production could use either of two processes. One would entail a variable cost of $15 per unit and an annual fixed cost of $280,000; the other would entail a variable cost of $18 per unit and an annual fixed cost of $206,000. Three vendors are willing to provide the part. Vendor A has a price of $20 per unit for any annual quantity up to 25,000 units. Vendor B has a price of $23 per unit if demand is 1,000 units or less, but $19 per unit (for all units) if demand is greater. Vendor C offers a price of $22 per unit for the first 1,000 units, and $20 per unit for additional units.
At what quantity would alternatives Internal production 1 and Internal production 2 yield the same profit?
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Develop a report for Figi Fabricating that will address the question of whether the company should continue to purchase the part from the supplier or begin to produce the part itself.
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