A company is considering producing a gear assembly that it now purchases from a supplier. The supplier charges $4 per unit, with an additional one-time payment of $8,000 units. The company estimates that it will cost $15,000 to set up the process and then $1.5 per unit for labor and materials.
What is the cross-over point? Please provide the formula, at least one step of calculation, and the correct answer for full credit.
If the expected production volume is 5,000 units, which option gives a lower total cost? Please provide at least one step of calculation and the correct answer for full credit.