Quality Metalcraft is a company in Michigan that makes prototype parts for GM and Ford. The QMC manager is putting together a Request for Proposal (RFP).
A) You have been asked by this manager to determine the
break-even price for 4 runs (400 units--each
run is 100 parts). What is it?
B) If GM likes the parts, they may extend the contract by 2 more runs. What is the break-even point for
running both the 5th and 6th runs together?
Quantity Marginal Cost per run Total Cost Average Cost per run
$64
$64 $64
2 runs $58
$122 $61
3 runs $52
$174 $58
4 runs $46
$220 $55
5 runs
$40
$260 $52
6 runs
$34
$294 $49
1 run