James Company manufactures 100 luxury yachts per month. Included in each yacht is a compact media center. James manufactures media center in-house, but is considering the possibility of outsourcing that function. At present, the variable cost per unit is $275, and the fixed costs are $39,000 per month. If they outsource, fixed costs could be reduced by half, and the vacant facilities could be rented out to earn $1,000 per month of rental income.

At what contract rate would outsourcing pay off for Seven Seas?

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Saving in variable cost 100 275 27500 S... View the full answer