# At Fraser Engineering, Eric is trying to decide whether to purchase a certain part or to have it…

At Fraser Engineering, Eric is trying to decide whether to purchase a certain part or to have it produced internally. Internal production could use either of two processes. One would entail a variable cost per unit of \$17, and an annual fixed cost of \$200,000; the other would entail a variable cost of \$14 and annual fixed costs of \$240,000. Three vendors are willing to provide the part. FRASER Vendor A has a price of \$20 per-unit for any volume up to 30,000 units. engineered bronze Vendor B has a price of \$22-per-unit for demand of 1,000 units or less, and \$18 per-unit for larger quantities. Vendor C offers a price of \$21-per-unit for the first 1,000 units, and \$19 for each additional unit. 1. What is the correct formula to use to compare these options? [2 marks] a. 2. Which options would be best for: [6 Marks) 10,000 Units? b. 20,000 Units? C. 100,000 Units? 3. What is the value in considering these option across three very different demand values ranging from 10,000 to 100,000 units ? [2 marks]

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