The Sylva Manufacturing Co. is considering the outsourcing of one of its standard parts to free up capacity for other, more important items. Sylva makes the part for $17 and requires 30,000 of the parts per year, with a fixed-cost contribution of $7,500 per year. Their purchasing executives have identified one supplier in Latin America that can make the part for $22 per unit but requires an up-front, one-time contractual fee of $2,500.

1. Calculate the break-even point.

2. If Sylva needed 1,500 units, should Sylva make the parts themselves or buy them from their supplier in Latin America? (Explain by comparing calculated costs)?

3. If Sylva needed 900 units, which option should be preferred? (Explain by comparing calculated costs)?

4. If Sylva needed 1,000 units, which option should be preferred? (Explain by comparing calculated costs)?