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
-Based on the answer to Question 31, what would be Sunderland's break-even cost?

A) $23,000
B) $11,500
C) $69,000
D) $46,000
E) Do not have enough information to compute