Suppose that a manufacturer can produce a part for $8.00 with a fixed cost of $2,000. Alternately, the manufacturer could contract with a supplier in Asia to purchase the part at a cost of $12.00, which includes transportation.
a. If the anticipated production volume is 1,300 units, compute the total cost of manufacturing and the total cost of outsourcing
b. What is the best decision?
The total cost of manufacturing is $___
(Simplify your answer.)