STERLING$-$CP is developing a new high tech dog crate carrier. His company has been building crates of all sorts for decades, but this is a new design for them and the type of cushioning required for the interior of the crate is not something they have ever produced. The equipment and technology required to produce the high$-$tech cushioning would be $$150,000$ and would be a fixed cost. They have an order for $10,000$ crates from a large retailer and have determined their variable cost to produce in house would be $$35\mathrm{.}00$ per unit. They have received a quote from a vendor who can produce the cushioning for them at $$60\mathrm{.}00$ per unit.

a$.$ What is the cost to produce in$-$house?

b$.$ What is the cost to outsource?

c$.$ What is the break$-$even point?

d$.$ Based solely on break$-$even theory and considering no other factors, should they outsource or produce in$-$house?

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