Laura Manufacturing must decide whether to insource or outsource a new toxic$-$free miracle carpet cleaner that works with its

Miracle Carpet Cleaning Machine. If it decides to insource the product, the process would incur $$200,000$ of annual fixed costs and

$$1\mathrm{.}25$ per unit of variable costs. If it is outsourced, a supplier has offered to make it for an annual fixed cost of $$90,000$ and a variable

cost of $$2\mathrm{.}05$ per unit in variable costs.

a$)$ Given these two alternatives, determine the indifference point $($where total costs are equal$).$

Indifference point

units

b$)$ If the expected demand for the new miracle cleaner is $300,000$ units, what would you recommend that Laura Manufacturing do$?$

is a cheaper alternative. The actual difference between the total costs of insourcing and outsourcing may be

computed to be $