A tiny firm inhas a tendency to increase the capacity of a bottleneck operation by adding a new machine. Two alternatives, A and B, have actually been established, and the linked costs and earnings have been approximated. Annual resolved prices would certainly be \$36,000 for A and \$31,000 for B; variable costs per unit would be \$8 for A and \$11 for B; and revenue per unit would certainly be \$16.

You are watching: At what volume of output would the two alternatives yield the same profit?

a. Determine each alternative’s break-also suggest in devices. (Round your answer to the nearemainder entirety amount.)

QBEP,A ____ units

QBEP,B _____units

b. At what volume of output would certainly the two options yield the same profit? (Round your answer to the nearest totality amount.)

Profit ____units

c. If supposed annual demand also is 11,000 units, which different would certainly yield the higher profit? A or B?

Answer:- The break even for A is given by:-

36000+8x = 16x

8x =36000

x=4500

The break even for B is given as:-

31000+11x = 16x

5x=31000

x =6200

So, for A:- 4500 unit, B:- 6200 units

“ Answered! A little firm inhas a tendency to increase the capacity of a bottleneck procedure by adding a brand-new machine. Two options, A… ”

Answer:- The equal profit will be derived when

36000+8x = 31000+11x

3x = 5000

x = 1666.67 units

Answer;- when yearly demand also is 11000 units

then for A:-

Profit= 11000*16 – 36000 – 8*11000

Profit= 176000-36000-88000

Profit= 52000

For B:-

Profit= 11000*16 -31000-11*11000

Profit= 24000

So choice A gives greater profits.

“ Answered! A small firm inhas a tendency to increase the capacity of a bottleneck operation by adding a new machine. Two options, A… ”

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