A Company Has Two Alternatives for Meeting a Customer Requirement

question 26

Multiple Choice

A company has two alternatives for meeting a customer requirement for 9,000 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 breakeven point and determine if they should make the item in-house or outsource it.

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