3-16 Effects of Size of Machines The Dore Foods Company is planning to manu- facture doughnuts for its chain of coffee shops throughout the city. Two alter- natives have been proposed for the production of the doughnuts-use of a semiautomatic machine, or a fully automatic machine. The shops now purchase their doughnuts from an outside supplier at a cost of 5 per doughnut. Annual fixed cost Variable cost per doughnut SEMIAUTOMATIC $3,000 AUTOMATIC $5,000 $ .02 $ .015 The president has asked for the following information: 1. For each machine, the minimum annual number of doughnuts that must be sold in order to have the total annual costs equal to outside purchase costs 2. The most profitable alternative for 300,000 doughnuts annually 3. The most profitable alternative for 600,000 doughnuts annually 4. The volume level that would produce the same net income regardless of the type of machine owned