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A manufacturing firm is considering whether to produce or outsource the production of a new product. If they produce the item themselves, they will incur a fixed cost of $950,000 per year, but if they outsource overseas there will be a $1.5 million cost per year. The advantage of outsourcing overseas is the variable cost of 95¢ per unit, which is a fraction of their $43/unit cost in their own union shop. Regardless of where these devices are made, they will sell for $98 each. What is the break-even quantity for each alternative? Solve this problem graphically and algebraically.
Product
A tangible good, an intangible service, or a combination of these.
Equipment
Tools or machinery that are necessary for a particular kind of work or activity, often utilized in various fields such as construction, manufacturing, and medical.
Materials
The physical substances from which objects are made, often used in the context of manufacturing and construction.
Labor
The human effort, both physical and mental, used in the production of goods and services.
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