Clear sailing lifeboats uses 12,000 units of a certain component in production each year. presently, this component is purchased from an outside supplier at $9.50 per unit. for some time now there has been idle capacity in the factory that could be utilized to make this component. the costs associated with manufacturing the component internally rather than buying it from the outside supplier are direct materials $3 per unit direct labor $3 per unit variable overhead $2 per unit fixed overhead (based on production of 8,000 units per month) $2 per unit annual salary of new supervisor $12,000 assuming other things stay the same, at what price per unit from the outside supplier would the company be indifferent (on economic grounds) to buying or making the components?

The indifference price will be $10.33 for the current purchase level of 12,000 units.

Explanation:

Giving the following information:

The costs associated with manufacturing the component internally rather than buying it from the outside supplier are Direct materials $3 per unit Direct Labor $3 per unit Variable Overhead $2 per unit Fixed Overhead (based on production of 8,000 units per month) $2 per unit Annual salary of new supervisor $12,000

Fixed costs= 12,000 + 8,000 units*2= $28,000

Variable costs= 3+3+2= $8

Unitary costs for 12,000 units= 8 + (28000/12,000)= $10.33

The indifference price will be $10.33 for the current purchase level of 12,000 units.

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know

answer production department;