Question: A shop what's to increase capacity by adding a new machine. The firm is considering proposals from vendor A and vendor B. The fixed costs
A shop what's 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 are $75,000. The variable cost for A is $15.00 per unit and for B $18.00 per unit. 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. No purchase because neither machine yields a profit at that volume. b. Machine A c. Machine B d. Either machine A or B e. Purchase both machines since they are both profitable
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