11. statistical analysis Return to the outsourcing illustration in Tables 11.3 and 11.4. Everything remains as specified, and the prices of the products are
P1 = 600 and
P2 = 1, 100. The new feature concerns whether the overhead LLA is well specified. To this end, the following data from the 10 most recent periods are extracted from the accounting library.

t OVA OVS DLA DLS DMA DMS 1 1,428 1,596 256 76 24 612 2 1,811 2,228 446 106 49 985 3 1,775 2,306 428 78 61 986 4 1,005 2,239 205 25 86 1,003 5 1,687 1,701 404 54 113 676 6 1,568 2,502 365 15 130 1,028 7 1,299 2,256 262 82 37 1,066 8 1,625 2,268 366 26 79 1,016 9 1,570 2,405 385 45 122 1,069 10 1,411 1,656 234 98 42 679 Notice we have two distinct overhead pools, one for assembly (OVA)

and one for subassembly (OVS). No other overhead is present, so total overhead is simply OV = OVA +OVS. The other cost pool totals refer, of course, to direct labor and direct material in the assembly and subassembly spheres. No other direct costs are present.

units), how many units must Ralph sell in the first year for accounting income to be zero?

(c) Explain the difference between your two break-even calculations.

(d) What would you, as the banker, say to Ralph’s comment in (b)
above?