1. An electronics firm is considering two different manufacturing processes to make a new product. The first process is less capital-intensive, with fixed costs of $200,000 per year and variable costs of $2,400 per unit. The second (more capital-intensive) process has fixed costs of $1,000,000 per year but has variable costs of $450 per unit. The firm expects to sell the product at $3,200 per unit.

1. What is the break-even quantity for the less capital-intensive process? Answer with a whole number.
2. What is the break-even quantity for the more capital-intensive process? Answer with a whole number.
3. For the more capital-intensive process, if the firm must process 1,500 units per year, how high must the variable costs be for the firm to break-even?? Answer to two decimal places.
4. Now suppose that the firm is considering a third option - outsourcing the product at a cost of $2,900 per unit. Identify the approximate range over which outsourcing provides the lowest cost. What is the bottom of the range that it is the lowest cost?
5. Now suppose that the firm is considering a third option - outsourcing the product at a cost of $2,900 per unit. Identify the approximate range over which outsourcing provides the lowest cost. What is the top of the range that it is the lowest cost? Answer with a whole number. If it is unbounded (i.e. there is not a top of the range) enter the number 2000000. And If the firm anticipates producing 1,000 units per year, it should outsource. True or False?