1. PROBLEM: Borges Machine Shop Inc is considering three options to add production capacity shown in the chart below. Annual Fixed Costs Annual Variable Costs General Purpose Equipment $170,000 $16.00 Flexible Manufacturing System $240,000 $13.50 Dedicated Machine $660,000 $11.00 a. Find the crossover volume in units between each of the three options (2 crossover volumes). b. If production is expected to be 200,000 units per year, which option should Borges select?

2. Complete the following problem. You will use goal seek as above, but you will need to figure out how to integrate the selling price into the equations. Stapleton Manufacturing intends to increase capacity through the addition of new equipment. Two vendors have presented proposals. The fixed cost for proposal A is $80,000, and for proposal B is $39,000. The variable cost for A is $10 and for B is $14. The selling price (revenue per unit) of each unit is $20.00. a. What is the crossover point in units for the two options? b. At the expected volume of 8,300 units, which alternative should be chosen?