A Manufacturing Firm Is Considering Whether to Produce or Outsource

question 36

Essay

A manufacturing firm is considering whether to produce or outsource the production of a new product. If they produce the item themselves, they will incur a fixed cost of $950,000 per year, but if they outsource overseas there will be a $1.5 million cost per year. The advantage of outsourcing overseas is the variable cost of 95¢ per unit, which is a fraction of their $43/unit cost in their own union shop. Regardless of where these devices are made, they will sell for $98 each. What is the break-even quantity for each alternative? Solve this problem graphically and algebraically.

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Definitions:

Native American Headdresses

Sacred and culturally significant items worn by some Native American leaders and warriors, embodying respect, honor, and accomplishments.

Cultural Capital

Non-financial social assets that promote social mobility, such as education, intellect, style of speech, dress, or physical appearance.

Strategic Amnesia

The deliberate or unconscious decision to forget or overlook certain uncomfortable or inconvenient historical facts and events.

White Gaze

The perspective or lens through which white people view individuals of other races, often leading to stereotyping and misinterpretation of non-white experiences.