Question: our company is implementing a new production line for making solar panels. The company has two main alternatives in setting up the production line: either
our company is implementing a new production line for making solar panels. The company has two main alternatives in setting up the production line: either use highly automated equipment or use generalpurpose equipment. Cost information for these two options is as follows:
ALTERNATIVE FIXED COST VARIABLE COST
Automated Equipment $ per year $ per unit
GeneralPurpose Equipment $ per year $ per unit
i Use Scenario to answer this question. What is the breakeven quantity between the two options?
ii Use Scenario to answer this question. What are total costs under the Automated Equipment option for an annual quantity of units?
iii Use Scenario to answer this question. What are the total costs under the GeneralPurpose Equipment option for an annual quantity of units?
iv Use Scenario to solve this riddle. For what range of output is the GeneralPurpose Equipment the lowcost option? marks
v Use Scenario to answer this question. For what range of output is the Automated Equipment the lowcost option?
vi Use Scenario to solve this mystery. At an annual requirement of units, what does the company save per year by selecting the lowercost option?
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