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(12 points) Fashions, Inc. is a retail store that sells sweaters and jackets. In the past, it has bought all its sweaters from a supplier.
(12 points) Fashions, Inc. is a retail store that sells sweaters and jackets. In the past, it has bought all its sweaters from a supplier. However, Fashions has the opportunity to acquire a small manufacturing facility where it could produce its own sweaters. The projected data for each of the two options are as follows: Continue Buying $30.00 $20.00 Selling price per unit Variable cost per unit Total fixed costs (per Produce Themselves $30.00 $15.00 $150,000 $0 month) a. To earn an operating profit of $125,000 per month, how many sweaters would Fashions have to sell if it buys the sweaters from the supplier? b. To earn an operating profit of $125,000 per month, how many sweaters would Fashions have to sell if it produces its own sweaters? c. At what sales volume is Fashions, Inc. indifferent regarding which option they choose? d. Beyond the simple fact that they expect to make more money, describe why Fashions Inc. prefers to continue buying sweaters from a supplier (produce the sweaters themselves) at expected volumes lower (higher) than the one calculated in c
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