To resolve a capacity bottleneck in its manufacturing operations, McGuire Machinery has decided to add new...
Homework Answers
Break even point = Fixed Cost / ( Revenue - Variable Cost)
A. BEP for proposal A
= 60,000 / ( 25 - 14) = 5,454.54
B. BEP for proposal B
= 75,000 / ( 25 - 11.5) = 5,555.55
C. Vendor should choose the proposal A as the break even point of proposal A is lower than proposal B.
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