Buyer Organization Requested Make Recommendations Whether Make Buy Capital Machine Compone Q34216450

You as a buyer for your organization and has been requested tomake recommendations on whether to make or buy a capital machinecomponent. You have analyzed the performance history of the companyconcerning the purchase price, fixed and variable costs and haverealized that the purchase price and variable costs are in theorder of 2% and 1.8% respectively of the value of fixed costs.Below listed are the fixed costs and their related costcenters;

COST CENTERS

COSTS (K)

Workshop

2000000

Administration offices

1800000

Office equipment

1200000

Staff wages

2400000

Security and miscellaneous

600000

(a) At what volume will the company be indifferent betweenbuying and making a capital machine component?

(b) If you decided not to buy or make

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