Assignment task: A company asked one of its analysis teams to analyze and create models that help decide whether it should manufacture a particular product or outsource its production. The different components are given below.
Fixed Cost, FC = $25,000
Material Cost per Unit, MC = $2.15
Labor Cost per Unit, LC = $1.80
Outsourcing Cost per Unit, O = $4.50
a. Build a spreadsheet model and then construct a one-way data table with production
volume as the column input and savings due to outsourcing as the output. Breakeven occurs when savings equal zero. Vary production volume from 0 to 100,000 in increments of 10,000. In which interval of production volume does breakeven occur?
Group of answer choices
- Breakeven appears in the production volume interval of 80,000 to 90,000 units.
- Breakeven appears in the production volume interval of 50,000 to 60,000 units.
- Breakeven appears in the production volume interval of 40,000 to 50,000 units.
- Breakeven appears in the production volume interval of 60,000 to 70,000 units.