American automakers buy auto parts from independent suppliers rather than produce the parts themselves. in the 1980s, chrysler got about 70 percent of its auto parts from independent suppliers, while ford got about 60 percent and general motors got 25 percent. a decade earlier, the proportions were 50 percent at chrysler, 5 percent at ford, and 20 percent at general motors. why did american automakers decide to outsource most of their parts production? explain why independent producers of auto parts are more efficient than the automakers.

Given:                         Variable Cost     Fixed Cost 
                                     per haircut          per month
base salary                                               9660
manager bonus                                          530
commission                     5.92
advertising                                                 270
rent                                                            940
barber supplies                0.30
utilities                             0.25                   180
magazines                                                  25             
Total                                6.47                11605

Revenue                         11.47

Break even point in unit = Fixed expenses per month / Contribution margin per month.

Break even point in unit = 11,605 / (11.47-6.47) = 11,605 / 5 = 2,321 haircuts

Break even point in $ = Fixed expenses / Contribution margin ratio

Break even point in $ = 11,605 / (5/11.47) = 11,605 / 0.44 = 26,375

Net Income = (Contribution Margin * # of haircuts) - Fixed expenses

Net Income = (5 * 2,380) - 11,605 = 11,900 - 11,605 = 295