CIPD QUESTIONS

A manufacturer is looking for options in obtaining a product

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A manufacturer is looking for options in obtaining a product for sale, either through in-house manufacturing, or through an outright purchase. There are three options available to the manufacturer. If the manufacturer makes an outright purchase, it costs the manufacturer $200,000 to procure, but the cost of manufacturing is $15 per unit. On the other hand, he can buy Machine 2 at a cost of $80,000, but the cost of manufacturing now is $75 per unit. Determine the breakeven points for the manufacturer to decide which options to take.

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A manufacturer is looking for options in obtaining a product

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