Acompany has two alternatives for meeting a customer requirement for 9,000 units of a specialty molding. if done in-house, fixed cost would be $350,000, with variable cost at $30 per unit. if outsourced, the cost is $80 per unit. determine the break-even point and determine if they should make the item in-house or outsource it?

Determine the break-even point and determine if they should make the item in-house or outsource it?

QuantityTOTALIncome StatementUnit

9.000  $ 620.000Total Net Sales$ 69

The company should make the product in-house because it's cheaper than the outsource it.

Explanation:

The break even point it's achieve with the following conditions:

Quantity     9.000  

TOTAL    Income StatementUnit

$ 620.000Total Net Sales      $ 69

-$ 270.000Variable Cost          -$ 30

$ 350.000Contributing Margin$ 39

-$ 350.000Anual Fixed Costs  

and when the production it's outsourced the situation it's as follow:

Quantity     9.000  

-$ 720.000Variable Cost-$ 80

-$ 720.000Contributing Margin-$ 80

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