I am confused with this assignment on this site for Tenaplina tools from HB. on how the variable costs were done.

Tenalpina Tools 1. Giulia is clearly intrigued by the option to own the forge. If she were to accept the contract offer ($10.50 per unit price; 4,000 1 monthly) and assume ownership of the forge, how would her business model change [ at a minimum consider how her revenues would change and her costs would change]? Her revenues will not change in as much as the production alternatives have no observable impact on revenues. The costs would be substantially different under the insourcing/outsourcing models. Current outsourcing model: costs = $9.00 + $1.45 = $10.45 per piton; all costs are variable. Proposed insourcing model Variable costs Material $1.45 supplies 0.11 electricity 0.18 variable part found using high/low method Total per unit $1.74 Fixed costs labor 345.000 building costs 33,000 depreciation 14,355 electricity 20.736 fixed part found using high/low method S. GEA 7.200 Total per year 420.291 2. Assume Stanley Kowalchek's operating costs are correct in regard to operating the forge. Calculate the breakeven under the two production models being considered by Giulia. Breakeven owning the forge: 47.978.42 annual unit volume Breakeven outsourcing production: 1 annual unit volume