Question

The Vera Molding company has two alternatives for meeting a customer requirement for 8,500 units of a specialty molding. If done in-house, fixed cost would be $350,000 with variable cost at $33 per unit. Alternative two is to outsource for a total cost of $85 per unit.

What is the break-even quantity? Round your answer to the nearest whole number.
_____________ units
Should the firm make-in-house or outsource? Round your answers to the nearest dollar.
Total cost if done in-house: $ ____________-
Total cost if outsourced: $ _______________
So, the firm can save $ _______ by (producing in-house or outsourcing )

Answer 1

Step-by-step explanation:

1.)

350000+33x=85x

x= 6730.76923077= 6731

if x= 8500

In house= 350000+33*8500= 630500

Outsource= 85*8500= 722500

amount saved if done in house= 722500-530500= 92000