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5-2) A small firm intends to increase the capacity of a bottleneck operation by adding a new machine. Two alternatives, A and B, have been
5-2)
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 $31,000 for B; variable costs per unit would be $7 for A and $11 for B; and revenue per unit would be $17. |
a. | Determine each alternatives break-even point in units.(Round your answer to the nearest whole amount.) |
QBEP,A | units |
QBEP,B | units |
b. | At what volume of output would the two alternatives yield the same profit?(Round your answer to thenearestwhole amount.) |
Profit | units |
c. | If expected annual demand is 14,000 units, which alternative would yield the higher profit? |
Higher profit | (Click to select)BA |
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