a)
At break even point , Total profit = 0
Break even point for alternative A = 67 units
Break even point for Alternative B = 71 units
b)
The point of indifference = 80 units
c)
When volume < = 80 units , select alternative A
When volume > = 80 units, select alternative B
QUESTION 5 (20 points) A firm is considering two capacity alternatives: Alternative A and Alternative B....
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 $37,000 for A and $33,000 for B; variable costs per unit would be $10 for A and $11 for B; and revenue per unit would be $15. a. Determine each alternative’s break-even point in units. (Round your answer to the nearest...
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 $35,000 for B; variable costs per unit would be $7 for A and $11 for B; and revenue per unit would be $20. a. Determine each alternative’s break-even point in units. (Round your answer to the nearest...
Please explain. Thank you for helping Problem 5-4 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 $37,000 for A and $31,000 for B; variable costs per unit would be $9 for A and $11 for B; and revenue per unit would be $19. a. Determine each alternative's break-even point...
Cavalier printing is adding a new printing process. They have priced three alternative machines: A, B, and C. Machine A would have an annual fixed cost of $120,000 and variable costs of $25 per unit. Machine B would have annual fixed costs of $140,000 and variable costs of $20 per unit. Machine C would have fixed costs of $90,000 and variable costs of $30 per unit. Revenue is expected to be $50 per unit. Which alternative has the lowest break-even quantity?...
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 $31,000 for B; variable costs per unit would be $7 for A and $11 for B; and revenue per unit would be $17 a. Determine each alternative's break-even point in units. (Round your answer to the nearest...
M1_IND3. A distributor of fasteners is opening a new plant and considering whether to use a mechanized process or a manual process to package the product. The manual process will have a fixed cost of $36,234 and a variable cost of $2.14 per bag. The mechanized process would have a fixed cost of $84,420 and a variable cost of $1.85 per bag. The company expects to sell each bag of fasteners for $2.75. a) What is the break-even point for...
M1 IND3. A distributor of fasteners is opening a new plant and considering whether to use a mechanized process or a manual process to package the product. The manual process will have a fixed cost of $36,234 and a variable cost of $2.14 per bag. The mechanized process would have a fixed cost of $84,420 and a variable cost of $1.85 per bag. The company expects to sell each bag of fasteners for $2.75. a) What is the break-even point...
M1 IND3. A distributor of fasteners is opening a new plant and considering whether to use a mechanized process or a manual process to package the product. The manual process will have a fixed cost of $36,234 and a variable cost of $2.14 per bag. The mechanized process would have a fixed cost of $84,420 and a variable cost of $1.85 per bag. The company expects to sell each bag of fasteners for $2.75. What is the break-even point for...
A firm is considering two location alternatives. At location A, fixed costs would be $4,000,000 per year, and variable costs $0.30 per unit. At alternative B, fixed costs would be $3,600,000 per year, with variable costs of $0.35 per unit. If annual demand is expected to be 10 illion units, which plant offers the lowest total cost? O A. Plant A, because it is cheaper than Plant B for all volumes over 8,000,000 units O B. Plant A, because it...
Use straight line depreciation instead of $140 3. (20 points) The Ons Company has the following cost information on its new project: Initial investment: $700 Fixed costs are $200 per year Variable costs: $3 per unit Depreciation: $140 per year Price: $8 per unit Discount rate: 12% Project life: 3 years Tax rate: 34% a) Calculate the accounting and financial break-even quantities. b) Draw on a graph how the accounting and financial break-even quantity would change as the price changes?...