Make or Buy/Rent Decision
I'm not sure how to solve this without knowing the number of units being produced. I've solved problems similar to this before, but I've always been given the number of units or cost per unit. Can someone explain this in a relatively easy way?
Super-Quick PCs manufactures laptop computers and is considering whether they should continue to make the hard drives used in their laptops themselves or buy them from an outside supplier. The company has the following production costs related to the hard drives: (1) circuit boards and other components $30,000 (2) wages for assembly line workers $50,000 (3) utilities on the factory $5,000 and (4) rent on the factory $15,000. If Super-Quick purchases hard drives from the supplier, the company would sub-lease a portion of the factory to another company for $5,000. What is the maximum purchase price that Super-Quick should be willing to pay to purchase the hard drives so that it would cost them no more than what they currently spend to make the part?