Fast Finish, Inc. (FFI) has made a technological breakthrough in snow board finish application. FFI will apply the finish for $0.23 per unit in variable costs plus a fixed annual cost of $230,000. Use the cost and demand information given in Problem 3 for Downhill Boards to evaluate this proposal.
(a) What will it cost Downhill Boards to outsource the finishing process?
(b) At what demand level does it make sense economically to outsource the finishing process?
(c) What additional factors should be considered when making this outsourcing decision?