Power Notebooks Inc Plans Manufacture New Line Notebook Computers Management Trying Decide Q35004973

Power Notebooks, Inc. plans to manufacture a new line ofnotebook computers. Management is trying to decide whether topurchase the LCD screens for the computers from an outside supplieror to manufacture the screens in-house. The screens cost $100 eachfrom the outside supplier. To set up the assembly process requiredto produce the screens in-house would cost $100,000. The companycould then produce each screen for $75.

a)Determine the number of units where the cost of buy or make isthe same (indifferent point or break-even point).

b) If demand is below the break-even point, should the companymake or buy the LCD screes?

c) if demand is above the break-even point, should the companymake or buy the LCD screens?

d) What if the demand equals the break-even point?