Please show all work for question B. A global manufacturer of electrical switchi

Question

Please show all work for question B.

A global manufacturer of electrical switching equipment (ESE) is considering outsourcing the manufacturing of an electrical breaker used in the manufacturing of switch boards. The company estimates that the annual fixed cost of manufacturing the part in-house, which includes equipment, maintenance, and management, amounts to S10 million. The variable cost of labor and materials are $10.00 per breaker. The company has an offer from a major subcontractor to produce the part for $18.00 per breaker. a. How many breakers would the electrical switching equipment company need per year to make the in-house option he least cost ,? The company should consume more than 1250000 breakers per year to make the manufacturing the part in-house option the least costly. (Enter your response rounded to the nearest whole number.) b. Assume the subcontractor wants the company to share in the costs of the equipment. The ESE company estimates that the total cost would be $5 milion, which also includes management oversight for the new supply contract. For this concession, the subcontractor will drop the per unit price to $11.00. Under this assumption, how many breakers would the ESE company need per year to make the in-house option least costly? The company should consume breakers per year to make the manufacturing te part house op on the east cost y (Enter your esporsero dedto the nearest whole number

Explanation / Answer

Break even units = Total fixed costs /(Sale price per unit - Variable price per unit)

The company has to atleast consume the breakeven unit for the subcontractor

= 5000000/(11-10)

= 5 million breakers

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