An entrepreneur identifies a product that she knows will sell like crazy if she can only figure out a way to bring it to her area. The entrepreneur has identified two ways to bring the product to the masses; she can import it, and she can try to produce it on her own. The fixed and variable costs for each of these alternatives are shown below. Each item is sold for $100. Import Produce Fixed Cost $25,000 $500,000 Variable Cost $30 $10 a. Identify the break-even point for each alternative. b. Under what condition Import option is preferred over Produce?

Answer rating: 100% (QA)

a To identify the breakeven point for each alternative we need to find the quantity of products that need to be sold in order to cover the total costs ... View the full answer