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A small company intends to increase the capacity of its bottleneck operation by adding a new machine. Two alternatives, A and B, have been identified,
A small company intends to increase the capacity of its 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 $42,000 for A and $30,000 for B; variable costs per unit would be $8 for A and $10 for B; and revenue per unit would be $12 for A and $13 for B.
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