2) [Chapter 7: 15 points] An electronics rm is considering two different manufacturing processes to make a new product. The rst process is less capital-intensive, with xed costs of $100,000 per year and variable costs of $500 per unit. The second (more capital-intensive) process has xed costs of $500,000 per year but has variable costs of $300 per unit. The rm expects to sell the product at $1,000 per unit. a. What are the cross-over quantity and cost? If the expected annual sales for the product is 1,500 units, which process would you choose? Using an appropriately labelled diagram, plot the two co st lines on a single graph illustrating the crossover point. Identify, on the graph, the approximate range over which each process provides a lower cost. If the rm must process 2,500 units per year, how high must the xed costs for the more capital-intensive process be for the rm to be indifferent between the two processes? If the rm must process 2,500 units per year, how low must the variable costs for the less capital-intensive process be for the rm to be indifferent between the two processes? b. What is the break-even quantity for the less capital-intensive process? What is the break-even quantity for the more capital-intensive process? For the more capital-intensive process, if the rm must process 2,500 units per year, how high must the variable costs be for the rm to break even? c. Now suppose that the rm is considering a third option outsourcing the product at a cost of $800 per unit. Identify the approximate range over which outsourcing provides the lowest cost. Would you suggest outsourcing if the rm anticipates producing 2,500 units per year? Why? What are the cost savings from choosing the low-cost alternative? Using an appropriately and clearly labelled diagram, plot the three total cost lines on a single graph illustrating the crossover points. Identify, on the graph, the approximate range over which each option provides the lowest cost