A manufacturing company has decided to increase the capacity of its bottleneck operation by adding a new
A manufacturing company has decided to increase the capacity of its bottleneck operation by adding a new machine. They have identified two alternatives, A and B. Machine A would incur fixed costs of $200,000 per year and variable costs per unit would be $50. For Machine B, fixed costs would be $130,000 per year, with variable costs of $80 per unit. For both, the income per unit is $150.
to. What is the break-even point in units for each alternative?
b. At what volume of production would the company be indifferent between the two
C. If the expected annual demand is 2,000 units, which one should the company choose?