Case one
XYZ manufactures plastic shelving. The annual fixed cost for its current injection equipment is $ 100,000 variable cost is $25 per unit. The annual fixed cost for a new system is $ 250,000, but variable cost is only $10 per unit. What is their breakevenpoint
Case two:
A firm is evaluating the alternative of manufacturing a part that is currently being outsourced from a supplier. The relevant information is provided below
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For in house manufacturing
Annual fixed cost =$45000
Variable Cost per part= $ 140
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For purchasing from supplier (outsouced)
Purchase price per part=$160
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Using this information, determine the brekeven quantity for which the firm would be indifferent between manufacturing the part in house or outsourcing it?
(a) If demand is forecast to be 2,500 parts should they make the part in house or purchase from a supplier?
(b) The marketing department forecast that the upcoming year's demand will be 2,500 units. Anew supplier offers to make the parts for $150 each. Should the company accept the offer?