A Company Asked One of Their Analysis Team to Analyze

question 53

Essay

A company asked one of their analysis team to analyze and create models that help decide whether they should manufacture a particular product or outsource its production. The different components are given below.
Fixed Cost, FC = $25,000
Material Cost per Unit, MC = $2.15
Labor Cost per Unit, LC = $2.00
Outsourcing Cost per Unit, O = $4.50
a. Build a spreadsheet model and then construct a one-way data table with production volume as the column input and savings due to outsourcing as the output. Breakeven occurs when savings equal zero. Vary production volume from 0 to 100,000 in increments of 10,000. In which interval of production volume does breakeven occur?
b. Using the appropriate Excel tool, find the exact breakeven point.

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Definitions:

Employee Contracts

Agreements between employers and employees that outline the terms of employment, duties, and compensation.

Purchasing Decisions

The process of deciding which goods or services to buy, considering factors like price, quality, and personal preferences.

Lawsuit

A legal action brought by one party against another in a court of law, usually seeking a remedy for harm or a decision about rights.

Specific Tasks

Specific tasks refer to particular jobs or duties assigned in the context of a project or a role, often detailing responsibilities in professional settings like legal practices.