Chapter 5: Capacity Planning Class Example A firm is considering three capacity alternatives: A, B, and C. Alternative A would have an annual fixed cost of $100.000 and variable costs of $22 per unit. Alternative B would have annual fixed costs of S120,000 and variable costs of $20 per unit. Alternative C would have fixed costs of $80,000 and variable costs of $30 per unit. Revenue is expected to be $50 per unit. Solve using graphs: 1. What are the equations for the Profits, if Q units are produced PA = Ps = Pe= 2. Using excel spreadsheet, generate values for Q in increments of 200 until you get Q= 20,000. Then use excel formulas to calculate the profits (using the profit equations above) as we did in class. 3. Draw the profit lines on same graph. Using your graphs, please answer the following questions. (A) Which alternative has the lowest break-even quantity? (B) Which alternative will produce the highest profits for an annual output of 10,000 units? (C) Which alternative would require the lowest volume of output to generate an annual profit of $50,000