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
-A company with fixed costs of $20,000 per month has a target price of $180 for their sole product, a heat shield for masonry fireplaces. What level of output represents their break-even point if their variable cost for producing is $40 per unit?

A) Between 100 and 110 units
B) Between 110 and 120 units
C) Between 120 and 130 units
D) Between 130 and 140 units
E) Between 140 and 150 units