Problem:
Nummer electric company can make a product in-house or outsource it. The fixed cost to produce it in-house is $72,000 abd each item costs $420 to produce. If out-sourced each item will cost $600. The items sell for $800.
Which is more profitable if the expected sales level is 200?
Which is more profitable if the expected sales level is 1000?
What is the breakeven quanityfor producing in-house?
What is the breakeven quanity for outsourcing?
At what level of sales soes it become more profitable to produce in house rather than outsource?