$5-1$:

$.$ A producer of pottery is considering the addition of a new plan to absorb the backlog of demand that now exists. The primary location being considered will have the fixed costs of $$20,000$ and variable costs of $$6$ per unit produced. Each item is sold to retailers at a price that averages $$10$

Required: $($rounded to two decimal places$)$:

a$.$ What volume per month is required in order to break even?

b$.$ What profit would be realized on a monthly volume of $15,000$ units?

c$.$ What volume $($Q$)$ is needed to obtain a profit of $$15,000$ per month?

d$.$ What volume $($Q$)$ is needed to provide a revenue of $$25,000$ per month?

$5-2$:

A manager must decide which type of machine to buy, A or B$.$ Machine costs are as follows:

Machine Cost

A $$110,000$

B $50,000$

Product forecasts and processing times on the machines are as follows:

PROCESSING TIME PER UNIT

$($Minutes$)$

Product Annual Demand Machine A Machine B

$1$

$20,000$

$3$

$4$

$2$

$15,000$

$2$

$3$

$3$

$7,500$

$3$

$5$

$4$

$40,000$

$1$

$3$

Assume that only purchasing costs are being considered. Machines $($both A and B$)$ operate $12$ hours a day, $250$ days a year. Which machine would have the lower total cost, and how many of that machine would be needed? Note that you could not buy a portion$/$part of a machine!!

Submission Instructions: