Vista Company manufactures electronic equipment. In 2021, it purchased from an...
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Vista Company manufactures electronic equipment. In it purchased from an outside supplier the special switches used in each of its products. The supplier charged Vista $ per switch. As an alternative, Vistas CEO considered purchasing either machine A or machine B so the company could manufacture its own switches. The CEO decided at the beginning of to purchase machine A based on the following data:
Machine A Machine B
Annual fixed cost depreciation $ $
Variable cost per switch
Required:
Assume that machine A has not yet been purchased. What is the annual volume that would make the company indifferent between the two decision alternatives ie purchasing and then using machine A to make the switches versus purchasing the switches from the outside vendor
Assume that machine A has already been purchased. Is it preferable to use machine A to make the switches or to purchase the switches from the external supplier?
Assume that machine A has already been purchased. At what annual volume level should Vista consider replacing machine A with machine B
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