A fabrication company wants to increase capacity by adding a new machine. The firm is considering proposals

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Question:

A fabrication company wants to increase capacity by adding a new machine. The firm is
considering proposals from vendor A and vendor B. The fixed costs for machine A are $90,000 and
for machine B, $75,000. The variable cost for A is $15.00 per unit and for B, $18.00. The revenue
generated by the units processed on these machines is $21 per unit. If the estimated output is 5000
units, which machine should be purchased?

a. machine A

b. machine B

c. either machine A or machine B

d. no purchase because neither machine yields a profit at that volume

e. purchase both machines since they are both profitable