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 $23,000 for B; variable costs per unit would be $10 for A and $11 for B; and revenue per unit would be $16. a. Determine each alternative's break-even point in units. (Round your answer to the nearest whole amount.) ОВЕРА ОВЕРВ units units b. At what volume of output would the two alternatives yield the same profit (or loss)? (Round your answer to the nearest whole amount.) units c. If expected annual demand is 11,000 units, which alternative would yield the higher profit (or the lower loss)?

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
icon
Related questions
Question

H4. Please show all step by step calculation 

 

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 $23,000 for
B; variable costs per unit would be $10 for A and $11 for B; and revenue per unit would be $16.
a. Determine each alternative's break-even point in units. (Round your answer to the nearest whole amount.)
QBEPA
QBEP,B
b. At what volume of output would the two alternatives yield the same profit (or loss)? (Round your answer to the nearest whole
amount.)
Q
units
units
units
Check my work
c. If expected annual demand is 11,000 units, which alternative would yield the higher profit (or the lower loss)?
Transcribed Image Text: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 $23,000 for B; variable costs per unit would be $10 for A and $11 for B; and revenue per unit would be $16. a. Determine each alternative's break-even point in units. (Round your answer to the nearest whole amount.) QBEPA QBEP,B b. At what volume of output would the two alternatives yield the same profit (or loss)? (Round your answer to the nearest whole amount.) Q units units units Check my work c. If expected annual demand is 11,000 units, which alternative would yield the higher profit (or the lower loss)?
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps with 2 images

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Practical Management Science
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Business in Action
Business in Action
Operations Management
ISBN:
9780135198100
Author:
BOVEE
Publisher:
PEARSON CO
Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.