Mixed Company is evaluating the following two options:

Option A: Sell a product domestically that will require a significant capital investment of $400,000 and variable costs of $20 per unit. The company would like to price the product at $52 per unit.

Option B: Produce and sell a product in a foreign country with attractive labor rates, so that less automation is required. Fixed costs are projected to be $143,000 and variable costs are $15 per unit. The company is planning to sell the product at $28 per unit.

a. How many units need to be sold under each option to break even?

b. At what level of unit sales would operating income for the two options be the same? Hint: Set up an equation to equate the operating incomes: total contribution margin less fixed costs.

c. What other factors, risks, and challenges should the company consider, given the information provided?