Pearl Systems produces and sells speakers and CD players. The following information has been collected about the costs related to the systems:

Selling price per unit			$ 72
Production costs per unit
	Direct materials		$ 23
	Direct labour		18
	Variable overhead		2
Total fixed overhead			$ 303,920

Pearl normally produces 23,200 of these systems per year.

The managers have recently received an offer from a Mexican company to produce these systems for $ 51 each. The managers estimate that $ 245,920 of Pearls fixed costs could be eliminated if they accept the offer.

Perform a quantitative analysis for the decision, and present your results in a schedule. (Round entries for this part to 2 decimal places, e.g. 12.55.)

				Make			Buy
Purchase price				$			$
Variable costs:
	Direct materials
	Direct labour
	Variable overhead
Avoidable fixed cost
		Total		$			$

Pearl should buy/ make.

Under the general decision rule for this type of decision, what production level is required for Pearls managers to be indifferent?

Production level:

systems