A firm plans to begin production of a new small appliance. The manager must decide...
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A firm plans to begin production of a new small appliance. The manager must decide whether to purchase the motors for the appliance from a vendor at $9 each or to produce them in-house. Either of two processes could be used for in-house production; Process A would have an annual fixed cost of $180,000 and a variable cost of $7 per unit, and Process B would have an annual fixed cost of $195,000 and a variable cost of $6 per unit. Determine the range of annual volume for which each of the alternatives would be best.
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