Use the Following Scenario to Answer the Questions Below

question 79

Multiple Choice

Use the following scenario to answer the questions below.
A company must decide if it will make or buy an item it needs.The company can make the item for $10 / unit,but must spend $15,000 per year in tooling to do so.An outside firm has quoted a total price of $12 / unit to supply the quantity required.
-Refer to the instruction above.What is the break-even point in this situation?

• A)6,500 units
• B)7,250 units
• C)7,500 units
• D)8,000 units

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Definitions:

Normal Standard

A benchmark or baseline condition expected to be present in a set of data, processes, or operations.

Direct Materials Price Variance

The difference between the actual cost of direct materials and the expected cost at standard prices.

Actual Price

The price at which goods or services are sold, reflecting current market conditions.

Standard Price

A predetermined cost serving as a benchmark for the valuation of goods and services in accounting and budgeting.