Warwick Manufacturing must decide whether to purchase Process A with specialized metal folding equipment needing two employees to operate it or Process B with general-purpose folding equipment requiring five employees. Process A requires a fixed cost of 1,430,000 and a variable cost of 14.32 per metal panel. Process B requires a fixed cost of 820,000 and a variable cost of 20.05. Process A is more automated than Process B.

1. What is the break-even quantity between these two processes?

2. If the predicted demand for next year is 120,000 panel folds, what process do you recommend? What is the cost savings?

3. What do you recommend if Warwick Manufacturing can buy folded metal panels of identical size at a price of 27.25 per panel?