You run a manufacturing facility that makes roller skates. fixed monthly cost is $50,000 in mortgage, $3,000 per employee on average in salaries (you have 40 employees) and $20,000 in other expenses. the cost of raw materials is $2 per skate, and other costs per skate average to about $1. you sell the skates for $19.95 each.

you have the option of outsourcing the manufacturing, which will cost you $10 per skate, with a lower fixed cost of $90,000. at what point will you be indifferent between manufacturing yourself versus outsourcing it?