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Q 1 ( BREAK - EVEN ANALYSIS ) - An operations manager is deciding on the level of automation used to produce a new product.
QBREAKEVEN ANALYSIS An operations manager is deciding on the level of automation used to produce a new product. The fixed cost for automation includes the equipment purchase price, installation, and initial spare parts. The variable costs per unit for each level of automation are primarily labor related. Each unit can be sold for $ If you determine that this new product will not be profitable, you can choose to not produce or sell it $ fixed cost, $ variable costs We have no forecastspredictions about future demand. Instead, we want to know what our best automation alternative is at every possible level of demand. Assume the sale price is $ per unit.
tableAlternativetableFixedCoststableVariableCostsperUnitAC
part A
Calculate the breakeven quantities for each alternative. If the projected demand is units, what should you do
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