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
b. At what volume of output would certainly the two options yield the same profit? (Round your answer to the nearest totality amount.)
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
The break even for B is given as:-
31000+11x = 16x
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= 11000*16 -31000-11*11000
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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