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What does a break-even analysis tell you about this business venture? What if they could reduce variable cost and/or increase the average price per wash?
What does a break-even analysis tell you about this business venture? What if they could reduce variable cost and/or increase the average price per wash?
B D E F G H Outsourcing Decision Technology Choice Decision 10,000 Quantity 12,000 Quantity 11,000 Produce In-House Option A $100,000.00 $12.00 Fixed cost $250,000.00 Unit cost $20.00 Fixed cost Unit cost $200,000.00 $18.601 1 Break-Even Analysis 2 Enter data only in yellow cells. 3 4 Profitability Analysis 5. Quantity 6 7 Cost 8 Fixed cost 9 Unit cost 10 11 12 Revenue 13 Unit revenue 14 15 Total Cost 16 Total Revenue 17 Net Profit 18 Profit or Loss 19 Outsource Option B Fixed cost Unit cost Fixed cost Unit cost $100,000.00 $21.00 $20.00 $35.00 $220,000.00 $200,000.00 -$20,000.00 Loss Total In-House Production Cost $490,000.00 Total Outsourced Cost $420,000.00 Cost difference (In-House - Outsourced) $70,000.00 Economical Decision Outsource Total Cost Option A Total Cost Option B Cost difference (Option A - Option B) Economical Decision $404,600.00 $331,000.00 $73,600.00 Option BStep by Step Solution
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