Determine each alternatives break-even point in units


Problem: A small firm intends to increase the capacity of a bottleneck operation by adding a new machine. Two alternatives, A and B, have been identified, and the associated costs and revenues have been estimated. Annual fixed costs would be $36,000 for A and $35,000 for B; variable costs per unit would be $7 for A and $11 for B; and revenue per unit would be $20.

a. Determine each alternative's break-even point in units.

Note: Round your answer to the nearest whole amount.

b. At what volume of output would the two alternatives yield the same profit (or loss)?

Note: Round your answer to the nearest whole amount.

c. If expected annual demand is 16,000 units, which alternative would yield the higher profit (or the lower loss)?

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Operation Management: Determine each alternatives break-even point in units
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