ABC, Inc. is a retail store that sells sweaters and jackets. In the past, it has bought all its sweaters from a supplier. However, ABC 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	Produce Themselves
Selling price per unit	$30.00	$30.00
Variable cost per unit	$20.00	$15.00
Total fixed costs (per month)	-- $0 --	$150,000

To earn an after tax profit of $125,000 per month, how many sweaters would ABC have to sell if it buys the sweaters from the supplier? ABC combined income tax rate, t, is 30%.

To earn an after tax profit of $125,000 per month, how many sweaters would ABC have to sell if it produces its own sweaters? ABC combined income tax rate, t, is 30%.

At what sales volume is ABC, Inc. indifferent regarding which option they choose?

Beyond the simple fact that they expect to make more money, describe why ABC Inc. prefers to continue buying sweaters from a supplier at expected volumes lower than the one calculated in c and prefers to produce the sweaters themselves at expected volumes higher than the one calculated in c.