Janet's Jolly Jerseys has decided that it needs to add a new workstation. Janet has shopped around and found two types of workstations, with different costs and revenues. Per-unit revenue is $19. For workstation type A, annual fixed costs are estimated to be $36,000, and variable costs per unit would be $10. For workstation type B, annual fixed costs are estimated to be $35,000 and variable costs per unit would be $11 for B.
a. What is the break-even point for each workstation? (Round up or down to the nearest whole number.)
QBEP,A ________units
QBEP,B ________units
b. What is the output level at which the two types of workstations result in the same amount of profit? (Round up or down to the nearest whole number.)
Profit _________units
c. If annual demand is forecast to be 18,000 units, which workstation should Janet buy in order to maximize profit?
Higher profit A or B