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ABC Company has two options to produce a product: 1. ABC could build their own factory for production, which yields $100,000 fixed cost and $10
ABC Company has two options to produce a product:
1. ABC could build their own factory for production, which yields $100,000 fixed cost and $10 variable cost per unit.
2. ABC could outsource the production to XYZ Company, which incurs $50,000 fixed cost and $20 variable cost per unit.
Assume ABC can sell every unit it produces. How many units of the product ABC will have to sell before Option 1 becomes more cost-efficient than Option 2 (or what is the break-even point/volume for the 2 options)? Show your calculation. (4 points)
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