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 $5.00 per unit and for B, $8.00. The revenue generate by the units processed on these machines is $22 per unit. If the estimated output is 9,000 units, which machine should be purchased?

Machine A
	Machine B
	Either Machine A or Machine B
	No purchase because neither machine yields a profit at that volume
	Purchase both machines since they are both profitable

Design capacity is the

average output that can be achieved under ideal conditions
	actual production over a specified time period
	maximum usable capacity of a particular facility
	maximum output of a system in a given period
	the capacity a firm expects to achieve given the current operating constraints

Effective capacity is the

maximum output of a system in a given period
	the capacity a firm expects to achieve given the current operating constraints
	average output that can be achieved under ideal conditions
	minimum usable capacity of a particular facility
	sum of all of the organization's inputs

Which of the following is not a strategic consideration for strategic-driven investments?

Select investments as part of a coordinated strategic plan.
	Choose investments that yield competitive advantage.
	Choose investments that consider product life cycles.
	Test investments in the light of several revenue projections.
	The month of February has 29 days.