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
-If Sunderland decides to sell the futon made in house for $53 per unit, calculate the break-even quantity.

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