Samoset Fans, Inc. manufacturers its fan blades in-house. The owner, Betty Dice, doesn’t outsource any fan parts except fan motors—all other fans parts are made in-house. Their current process and its equipment are getting old. Maintenance and repair costs are increasing at eight percent per year.

She and her company team are evaluating two new processes. The first process has an annual fixed cost of $720,000 and a variable cost of $17 per fan blade. The second process is more automated and requires an annual fixed cost of $1,300,000 and a variable cost of $13 per fan blade. The internal transfer cost of a fan blade is $20, and this helps the firm determine the total manufactured cost of a completed fan. Use the Excel template Break-Even in MindTap to answer the following questions:

a. What is the break-even quantity between these two processes?

b. If predicted demand for next year is 150,000 blades, what process do you recommend? What is the cost savings?

c. What volume of demand does Samoset Fans, Inc need to make an internal profit on fan blades of $100,000, assuming they installed the process you recommend in part (b)?