Question: (a) Explain, in your own words, why distinguishing between Fixed and Variable costs is important. (b).A shop wants to increase capacity by adding a new
(a) Explain, in your own words, why distinguishing between Fixed and Variable costs is important.
(b).A shop 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 $22 per unit. If the estimated output is 9,000 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
Explain in detail. Please don't post some random stuff as answers (I will downvote those kind of answers)
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