We are currently putting together a proposal for implementing a new product line. This product

line has an annual fixed cost of $$120,000,$ variable cost of $$18$ per unit of output, and revenue

$($selling price$)$ of $$30$ per unit of output.

a$.$ Please conduct a break$-$even analysis and report on the break$-$even quantity.

b$.$ We are also entertaining an alternative way of producing the product line, which will

require less fixed costs. This alternative way is to purchase a base product from a supplier

and then doing some editing, via $3$D printing in$-$house before selling. This new approach

would mean our annual fixed costs would be $$45,000$ and the variable costs will be made

up of two costs: $$51$ per unit to purchase from the supplier, and $$7$ per unit to handle the

$3$D printing. Based on this information: at what volume would we be indifferent between

the two alternatives?

c$.$ Our initial market research results show that we can expect a demand of $2,200$ units in

the initial year of sales. According to the results in the previous analysis, please make a

recommendation: would it make sense for us to go with the option that will require us to

build the product completely ourselves, or to utilize the alternative that requires us to use

$3$D printing? Please make a recommendation and provide a justification of your rationale.