Component

Quantity Needed Per Year

Total Factory Overhead/Unit($)
Fixed Factory Overhead/Unit($)
Variable Factory Overhead/Unit($)
Machine Hours/Unit Required
Total Machine Hours Required
Total Machine Hours Available for A,B & C
In-House Manufacturing
Cost Component
Variable Costs
Raw Material/Unit ($)
Labor/Unit ($)
Factory Overhead/Unit ($)
Total Variable Costs/Unit ($)
Total Variable Costs for All Units ($)
Fixed Costs
Factory Overhead/Unit ($)
Total Cost/Unit ($) (Fixed+Varaible)
Total Costs for All Units ($) (Fixed + Variable)

A
4000
50
30
20
5
20000

B
6000
40
24
16
4
24000
30000

Unit
A
90
40
20
150
600000

B
20
10
16
46
276000

30
180
720000

24
70
420000

C
8000
20
12
8
2
16000
30000
Buying from Supplier
Cost Component
C
80
42
8
130
1040000
12
142
1136000

Supplier Quote/Unit ($)

Fixed Costs
Factory Overhead/Unit ($)
Total Cost/Unit ($) (Quote+Fixed Overhead)
Loss/Gain Per Unit in Procuring from Supplier ($)
Total Loss/Gain in Procuring from Supplier ($)

Analysis
Maximum loss in purchasing from suppplier is for unit A and minimum for uni
the optimal strategy will be to manufacture all units of A in-house, outosurce
purchase of units of C to the supplier and used a mixed strategy for B i.e. ma
2500 components in-house and purchase 3500 components from the supplie

Unit
A
180

B
60

C
136

30
210
-30
-120000

24
84
-14
-84000

12
148
-6
-48000

unit A and minimum for unit C. Hence,

ts of A in-house, outosurce complete
mixed strategy for B i.e. manufacture
mponents from the supplier

Component
# Units Manufactured
# Units Outsourced
Total

A
4000
0
4000

B
2500
3500
6000

C
0
8000
8000

Component
Quantity Needed Per Year
Total Factory Overhead/Unit($)
Fixed Factory Overhead/Unit($)
Variable Factory Overhead/Unit($)
Machine Hours/Unit Required
Total Machine Hours Required
Total Machine Hours Available for A,B & C
In-House Manufacturing
Cost Component
Variable Costs
Raw Material/Unit ($)
Labor/Unit ($)
Factory Overhead/Unit ($)
Total Variable Costs/Unit ($)
Total Variable Costs for All Units ($)
Fixed Costs
Factory Overhead/Unit ($)
Total Cost/Unit ($) (Fixed+Varaible)
Total Costs for All Units ($) (Fixed + Variable)

A
4000
50
30
20
5
20000

B
6000
40
24
16
4
24000
30000

Unit
A
90
40
20
150
600000

B
20
10
16
46
276000

30
180
720000

24
70
420000

C
8000
20
12
8
2
16000
30000
Buying from Supplier
Cost Component
C
80
42
8
130
1040000
12
142
1136000

Supplier Quote/Unit ($)

Fixed Costs
Factory Overhead/Unit ($)
Total Cost/Unit ($) (Quote+Fixed Overhead)
Loss/Gain Per Unit in Procuring from Supplier ($)
Total Loss/Gain in Procuring from Supplier ($)

Unit
A
180
66
246
-66
-264000

Analysis
Maximum loss in purchasing from suppplier is for unit A and minimum for unit C
the optimal strategy will be to manufacture all units of A in-house, outosurce co
purchase of units of C to the supplier and used a mixed strategy for B i.e. manu
2500 components in-house and purchase 3500 components from the supplier

nit
B
60

C
136

66
126
-56
-336000

66
202
-60
-480000

minimum for unit C. Hence,

ouse, outosurce complete
egy for B i.e. manufacture
rom the supplier

Component
# Units Manufactured
# Units Outsourced
Total

A
4000
0
4000

B
2500
3500
6000

C
0
8000
8000