Smith has the following outsourcing data: Inside VC/Unit: 25 Inside Fixed Costs: 198,000 Outside VC/Unit: 34...

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Question

Smith has the following outsourcing data: Inside VC/Unit: 25 Inside Fixed Costs: 198,000 Outside VC/Unit: 34...

Smith has the following outsourcing data:

Inside VC/Unit: 25

Inside Fixed Costs: 198,000

Outside VC/Unit: 34

Outside Fixed Costs: 122,400

At what unit level does Smith incur inside production costs equal to outside production costs?

business accounting

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Answer 1

Answer #1

Unit level to breakeven = change in fixed cost/change in VC

=[198000-122400 ]/[34-25]

= 75600/9

= 8400 units

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Answer 2

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