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|(a)||Considering only the costs outlined above, should the component be purchased from Trigger or manufactured in house?
|(b)||In future, the company will incur additional annual safety inspection costs of 56,000 related to making the component, how would this affect the decision, if
(i) annual production is 2,000 units
(ii) annual production of 3,500 units
(iii) annual production is 4,000 units?
|(c)||The Production Director of Springer recently said, We must continue to manufacture the component as only a year ago we purchased some special grinding equipment to be used exclusively for this component. The equipment cost 100,000, it cannot be resold or used elsewhere and if we cease production of this component we will have to write off the written down book value which is 80,000.
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