A firm installs 2000 air conditioners. The firm can hire a team from its logistics department at a fixed cost of $10,000. Each unit will be serviced by the team at $15.00. The firm can also outsource this at a cost of $19.00 inclusive of all charges.

Which is a better decision? Manufacturing or Outsource?

Find the break even volume.

Manufacture Variable Cost=$15.00/unit Outsource Variable Cost=$19.00/unit

Manufacture Fixed Cost=$10,000 Outsource fixed Cost=$ -

VOLUME=2500 units

Find cost of manufacturing,outsourcing, cost difference

Break even point= _ units