Question: Q 1 ( BREAK - EVEN ANALYSIS ) - An operations manager is deciding on the level of automation used to produce a new product.

Q1(BREAK-EVEN ANALYSIS)- An operations manager is deciding on the level of automation used to produce a new product. The fixed cost for automation includes the equipment purchase price, installation, and initial spare parts. The variable costs per unit for each level of automation are primarily labor related. Each unit can be sold for $100. If you determine that this new product will not be profitable, you can choose to not produce or sell it ($0 fixed cost, $0 variable costs). We have no forecasts/predictions about future demand. Instead, we want to know what our best automation alternative is at every possible level of demand. Assume the sale price is $100 per unit.
Alternative Fixed Costs Variable
Costs per Unit
A 11000060
B 40000045
C 60000025
D 80000018
For each alternative, at what specific volume range is it the most attractive?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!