Durable Manufacturing Company wants to introduce a new product. The company estimates that the variable costs would be $8 and the fixed costs would be $70,000.
a) IF the selling price is $20, what is the break-even point?
b) IF the selling price is set at $18, the company expects to sell 15,000 units. What would be the total profit for this alternative?
c) A foreign firm has offered to produce the product at $10 per unit. If the selling price is to be set at $20, what would be the breakeven point between the decision to make or buy?
d) If demand is estimated to be greater than this breakeven point, what should be done, make or buy? ________________