Sunderland Furniture Is Determining the Make or Buy for a New

Multiple Choice

Sunderland Furniture is determining the make or buy for a new type of futon. Make-or-buy analysis indicates whether it would be preferable to make the new futon in house (option A) as compared to buying from the low-cost furniture maker (option B) . Here are the two options the company has:
Option A: Make at Sunderland, fixed costs = $7,000, variable costs = $39 per unit
Option B: Purchase the futon from a Mexico-based furniture maker for $46 per unit
-How many futons does Sunderland have to make in house to break even with buying them?

A) 1,500 units
B) 1,000 units
C) 500 units
D) 250 units
E) Do not have enough information to compute