Gabriela Manufacturing must decide whether to insource or outsource a new toxic-free miracle carpet cleaner that works with its Miracle Carpet Cleaning Machine. If it decides to insource the product, the process would incur $300,000 of annual fixed costs and $1.50 per unit of variable costs. If it is outsourced, a supplier has offered to make it for an annual fixed cost of $120,000 and a variable cost of $2.25 per unit in variable costs.

• Given these two alternatives, determine the indifference point (where total costs are equal).
• If the expected demand for the new miracle cleaner is 300,000 units, what would you recommend that Gabriela Manufacturing do?