Y5

A small firm intends to increase the capacity of a bottleneck operation for producing a product by adding a new machine. Two alternativesr A and B, have been identified and the associated costs and revenues have been estimated. Annual fixed costs would be $60000 forA and $40. 000 for B; variable costs per unit would be $20 forA and $15 for B; and revenue per unit would be $30. i. Find the total cost function for alternatives A and B. and the revenue function ii. Draw both the total cost functions and the revenue function in the same figure. iii. Find the break even point for the alternatives A and B and show it in the figure iv. At what volume of output would the two alternatives yield the same profit? Show it in the figure