document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=174286>Question 174286</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Can someone please help me with this problem:\r<BR>\n" );
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document.write( "A light company currently outsources an electrical switch that is a component in one of its products. The switches cost $20 each. The company is considering making the switches internally at the following projected annual production costs:\r<BR>\n" );
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document.write( "Unit-level material cost: $3<BR>\n" );
document.write( "Unit-level labor cost: $2<BR>\n" );
document.write( "Unit-level overhead: $1<BR>\n" );
document.write( "Batch-level set-up cost(5,000 units per batch): $25,000<BR>\n" );
document.write( "Product-level supervisory salaries: $37,500<BR>\n" );
document.write( "Allocated faclity-level costs: $20,000\r<BR>\n" );
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document.write( "The company expects an annual need for 5,000 switches. If the company makes the product, it will have to utilize factory space currently being leased to another company for $1,500 a month. If the company decided to make the parts, total costs will be:\r<BR>\n" );
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document.write( "$30,500 more than if switches were purchased<BR>\n" );
document.write( "$27,000 less than if switches were purchased<BR>\n" );
document.write( "$20,000 less than if switches were purchased<BR>\n" );
document.write( "$10,500 more than if switches were purchased<BR>\n" );
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document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #129254 by </B><A HREF=/tutors/aboutme.mpl?userid=solver91311><B>solver91311(24713)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=solver91311><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=solver91311><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=129254\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> If they continue to outsource the item, their total cost will be 5,000 X $20.\r<BR>\n" );
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document.write( "If they make the switches themselves, then it will cost:\r<BR>\n" );
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document.write( "$3 + $2 + $1 = $6 per switch times 5000 switches PLUS\r<BR>\n" );
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document.write( "$25,000 batch set-up PLUS\r<BR>\n" );
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document.write( "$37,500 salaries PLUS\r<BR>\n" );
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document.write( "$20,000 factory cost PLUS\r<BR>\n" );
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document.write( "$1,500 times 12 months lost lease revenue.\r<BR>\n" );
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document.write( "Add up all of the costs to make the switches themselves and compare it to the total cost of continuing to outsource.  You can do your own arithmetic. </SPAN>\n" );
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