Question
Please Use Excel to show your work A firm is considering two capacity alternatives: Alternative A and Alternative B. Alternative A would have an annual
Please Use Excel to show your work
A firm is considering two capacity alternatives: Alternative A and Alternative B. Alternative A would have an annual fixed cost of $40,000 and variable costs of $400 per unit. Alternative B would have annual fixed costs of $60,000 and variable costs of $250 per unit. Revenue per unit is expected to be $1000 per unit for Alternative A and $1100 for Alternative B. Complete the following tasks using Excel.
a) Create a graph for each alternative where you can observe the break-even point. Which alternative has a lower break-even point quantity?
b) Find the point of indifference for these two alternatives. Create a graph that shows the point of indifference quantity. Explain where you would see the break-even point quantities in this graph along with the point of indifference.
c) Provide a recommendation to the company. Which alternative should be selected and when?
A firm is considering two capacity alternatives: Alternative A and Alternative B. Alternative A would have an annual fixed cost of $40,000 and variable costs of $400 per unit. Alternative B would have annual fixed costs of $60,000 and variable costs of $250 per unit. Revenue per unit is expected to be $1000 per unit for Alternative A and $1100 for Alternative B. Complete the following tasks using Excel. a) Create a graph for each alternative where you can observe the break-even point. Which alternative has a lower break-even point quantity? b) Find the point of indifference for these two alternatives. Create a graph that shows the point of indifference quantity. Explain where you would see the break-even point quantities in this graph along with the point of indifference. c) Provide a recommendation to the company. Which alternative should be selected and whenStep by Step Solution
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