Use the Following Information to Answer the Questions Below

question 98

Multiple Choice

Use the following information to answer the questions below.
You currently make a part for old equipment at a cost of $20 / unit. The annual fixed cost for this equipment is $50,000. You have found an outside supplier who will make the part for $15 / unit if you will pay their annual fixed costs of $200,000 / year (see table) .

-Refer to the instruction above. What is the break even quantity between buying and making?

• A) 30,000 units per year
• B) 40,000 units per year
• C) 50,000 units per year
• D) 60,000 units per year

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Definitions:

Independent Contractors

Workers who provide services to a business under terms specified in a contract or agreement, without being considered employees of the business.

Principal

In finance, it refers to the original sum of money borrowed in a loan or invested, excluding any interest or dividends.

Liable

Subject to legal responsibility, often implying a requirement to compensate for damages or loss caused.

Torts

Civil wrongdoings recognized by law as grounds for a lawsuit, resulting in injury or harm that constitutes the basis for a claim by the injured party.