Question
Break-even Analysis Markland Manufacturing intends to increase capacity by overcoming a bottleneck operation by adding new equipment. Two vendors have presented proposals. The fixed
Break-even Analysis Markland Manufacturing intends to increase capacity by overcoming a bottleneck operation by adding new equipment. Two vendors have presented proposals. The fixed costs for proposal A are $50,000, and for proposal B, $70,000. The variable costs for A is $12.00, and for B, $10.00. The revenue generated by each unit is $20.00. What is the break-even point in units for both proposals, A and B? At what volume of output would the two alternatives yield the same profit? Markland's forecast predicts the next three year's demand will be 11,000 units, 12,000 units, and 13,500 units, respectively. How much money should Markland expect to make over these three years?
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