A building supply company is manufacturing residential doors. Because demand has been increasing for their products, the company is trying to evaluate whether to add a second production line. For their current single production line, they estimate that the machinery costs $12,000 per month, and raw materials cost $125 per door. They have been selling doors to retailers for $199 each. If they add the second line, machinery costs will increase to $20,000 per month, and the supplier of their raw materials will give them a quantity discount that brings the raw material cost down to $110 per door. 

a) How much profit(loss) does the company currently make if it can sell 150 doors per month?

b) What is the break-even point for two production lines?

c) What is the sales volume (i.e., number of doors sold per month) over which each option is preferred?

Answer rating: 100% (QA)

a To calculate the profit or loss the company currently makes with the single production line we nee... View the full answer