Capacity of a bottleneck operation

Reference no: EM13820113

A small firm intends to increase the capacity of a bottleneck operation by adding a new machine. Two alternatives, A and B, have been identified, and the associated costs and revenues have been estimated. Annual fixed costs would be $39,000 for A and $30,000 for B; variable costs per unit would be $10 for A and $11 for B; and revenue per unit would be $15.

a. Determine each alternative's break-even point in units.

b. At what volume of output would the two alternatives yield the same profit?

c. If expected annual demand is 16,000 units, which alternative would yield the higher profit?

Reference no: EM13820113

Questions Cloud

Why is it controversial at the present time : What is Affirmative action? Why is it controversial at the present time? Using your personal experience and the course material, make a case either in favor or against the statement.

Production of chocolate bars : Compute the multifactor productivity measure for each of the weeks shown for production of chocolate bars. Assume 40-hour weeks and an hourly wage of $14. Overhead is 1.5 times weekly labor cost. Material cost is $9 per pound.

Assess how these segments affect the corporation : Choose the two (2) segments of the general environment that would rank highest in their influence on the corporation you chose. Assess how these segments affect the corporation you chose and the industry in which it operates

Prepare a safety policy that could be used by an employer : Prepare a general safety policy that could be used by an employer in your preferred profession.

Capacity of a bottleneck operation : A small firm intends to increase the capacity of a bottleneck operation by adding a new machine. Two alternatives, A and B, have been identified, and the associated costs and revenues have been estimated. Annual fixed costs would be $39,000 for A ..

What is a modem : What is a modem

Create pro forma statements of five year : Using the sample financial statements, create pro forma statements of five year projections that are clear, concise, and easy to read. Be sure to double check the calculations in your pro forma statements. Make assumptions that support each line i..

What are the benefits associated with your decision : You can do one, all, or any combination of the above. What would you do and why? What are the benefits associated with your decision?

Designing a secure network : Designing a Secure Network

User Account

All Pages