Answer:
It is more convenient to keep making them in house. The fixed costs are sunk costs.
Explanation:
Giving the following information:
Flint Industries incurs unit costs of $7 ($4 variable and $3 fixed) in making an assembly part for its finished product. A supplier offers to make 16,800 of the assembly part at $5 per unit. If the offer is accepted, Flint will save all variable costs but no fixed costs.
Make in house= $4*16,800= 67,200
Buy= 5*16,800= 84,000
It is more convenient to keep making them in house. The fixed costs are sunk costs.
