A Company Has Two Alternatives for Meeting a Customer Requirement

question 25

Multiple Choice

A company has two alternatives for meeting a customer requirement for 6,000 units of a specialty molding. If done in-house, fixed cost would be $350,000, with variable cost at $30 per unit. If outsourced, the cost is $80 per unit. Determine the break-even point and determine if they should make the item in-house or outsource it.

• A) break-even point = 7,000 units; outsource it
• B) break-even point = 7,000 units; make it in-house
• C) break-even point = 11,667 units; outsource it
• D) break-even point = 11,667 units; make it in-house