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Question 2

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Use the information below to answer the following question(s) .
A small automotive parts manufacturer is evaluating opening a new manufacturing plant for assembly of its battery chargers line.The location being considered has a monthly fixed cost of $42,000 and a variable cost of $3 per charger.Chargers sell for $ 7 each.
-The other option (in addition to the option of opening a new manufacturing plant) being considered is subcontracting the work to an external vendor.This option has a monthly fixed cost of $6,000 and a variable cost of $5 per charger.Chargers continue to sell for $7 each.What is the break-even point for the subcontracting option in units per month?


A) 6,000
B) 3,000
C) 10,000
D) 7,500

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