Insourcing Incurs an Annual Fixed Cost of $500,000 and a Variable

question 53

Multiple Choice

Insourcing incurs an annual fixed cost of $500,000 and a variable cost of $60 per unit. Outsourcing incurs an annual fixed cost of $750,000 and a variable cost of $20 per unit. What is the indifference point between the two alternatives?

• A) 0 units
• B) ? 6250 units
• C) 6250 units
• D) 40 units
• E) 12,500 units

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Definitions:

Synthetic A Priori

A concept in epistemology that denotes judgments that are derived independently of experience while still providing new knowledge.

Kant

A profound influential philosopher, Immanuel Kant is celebrated for his work in the critique of pure reason and his moral philosophy that emphasizes duty, autonomy, and the moral law.

Authoritative Knowledge

Knowledge or information that is widely accepted and respected, often due to its source's credibility or its empirical verification.

Science

An organized effort that develops and arranges knowledge as verifiable explanations and forecasts regarding the cosmos.