Industrial Products, Inc. has two alternatives for manufacturing 12,000 industrial 100-horse power electric motors per year. If
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Industrial Products, Inc. has two alternatives for manufacturing 12,000 industrial 100-horse power electric motors per year. If done in-house, fixed cost would be $2,100,000 with variable cost at $6,800 per unit. Alternative two is to outsource for a total cost of $7,300 per unit.
a. What is the break-even quantity?
b. Should the firm make-in-house or outsource?
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The relevant formulas can be found in Supplement C BreakEven An...View the full answer
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