Question

Giving your recommendation

on calculation errors and if we should buy or make?

Year 2009 Buy 2010 Initial Investment : Unit Variable Cost: Annual Fixed Cost : Alternatives Process 1 1,150,457 $ 80.83 $ 455,000 $ 2011 Process 2 1,852,230 78.83 475,000 0 $ 120.00 $ $ $ $ 2012 2013 2014 2015 2016 2017 2018 Beer Cooler Demand 19059 18889 18719 18548 18370 18184 17983 17775 17590 17366 Year 2019 2020 2021 2022 Forecasted Demand 17217 $ 17030 S 16842 $ 16655 $ 16467 $ 16280 $ 670,612.54 $ 663,310.95 $ 656,009.36 $ 648,707.76 $ 641,406.17 $ 634,104.58 $ Net Income (260,444.13) $ 875,368.45 $ 860,724.03 $ 846,079.60 $ 831,435.18 $ 816,790.76 $ (947,782.59) 889,428.06 874,408.72 859,389.37 844,370.03 829,350.69 2023 2024 Unit Revenue $ 158.95 0.00 Breakeven = Total Net Income $ 49673.03 3,969,953.89 $ 58689.84 3,349,164.28 3,914,151.36 $

Answer 1

Make with Process 1 because in Precess 1 Total Net Income (3,969,953.89 $) is higher than other two alternates and Break Even is also Less than total Net Income.