Fast Finish, Inc. (FFI) has made a technological breakthrough in snow board finish application. FFI will apply the finish for $0.23 per unit in variable costs plus a fixed annual cost of $230,000. Use the cost and demand information given in Problem 3 for Downhill Boards to evaluate this proposal.
- (a) What will it cost Downhill Boards to outsource the finishing process?
- (b) At what demand level does it make sense economically to outsource the finishing process?
- (c) What additional factors should be considered when making this outsourcing decision?