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You are given the following information:
Costs
Make Option
Buy Option
Fixed Cost
$125,000
$5,000
Variable Cost
$15
$17
1. Find the break-even quantity and the total cost at the break-even point.
2. If the requirement is 150,000 units, is it more cost-effective for the firm to buy or make the components? What is the cost savings for choosing the cheaper option?
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