A bank is considering two alternatives for handling its projected number of service calls in the next decade (you should consider this as one period). If the bank sets up its own service call center in the U. S., the fixed cost is estimated to be $3,200,000.00, and the variable cost is calculated to be 29 cents per call. If the call service is outsourced to a foreign company, the fixed cost would be $150,000.00, and the unit charge would be 54 cents per call. Required:
a. What is the break-even number of service calls?
b. Draw a diagram representing the in-house and outsourcing total costs which are functions of the number of service calls. Indicate the break-even number of service calls on the diagram.