Question
2 (20 points). Company A has fixed expenses of $12,000 per year and each unit of product has a $0.20 variable cost. Company B
2 (20 points). Company A has fixed expenses of $12,000 per year and each unit of product has a $0.20 variable cost. Company B has fixed expenses of $6,000 per year and can produce the same product at a $0.50 variable cost per unit. (a) (10 pts) Let At what number of units of annual production will Company A have the same overall cost as Company B? (i.e., find the breakeven point) A. 20,000 units/year B. 24,000 units/year C. 28,000 units/year D. 32,000 units/year x= the number of units to produc per year. Then, 12000+ 0.20x=6000+ 0.5x. Answer: Solving for x yields x=20,000 units per year. A. 20,000 units/year.
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