Commodore is debating whether to produce the printed circuit boards for a new line of video cameras or outsource their production to a company that specializes in this operation. Strictly from a cost standpoint, production of the circuit boards would definitely be outsourced if:
A) the variable cost of producing the circuit boards is lower than the buy option.
B) the production volumes are greater than Commodore's break-even quantity.
C) the production volumes are less than Commodore's break-even quantity.
D) the production volumes are the same for making and buying the circuit boards.

Question

Quizplus · Accepted Answer

If the production volumes are less than Commodore's break-even quantity, it means that producing the circuit boards in-house would not cover the fixed and variable costs, making outsourcing a more cost-effective option.

Commodore Is Debating Whether to Produce the Printed Circuit Boards