Determine the break-even level of output

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A company is considering investing in one of the production processes identified below. The company anticipates charging $12 each for each new unit of output it will produce.

First process FC = 170,000     VC = 7$/unit

Second process FC 200,000      VC =$6/unit

A. Determine the break-even level of output for each of the processes.

B. If the company CFO, “Rowdy” Rob Robert’s goal is to make a target profit of $100,000, determine which process requires producing and selling the smaller quantity to achieve this target.

C. Suppose the company’s new CEO, “Trembling Joe” Green thinks that a profit of $50,000 is a safer bet than the CFO’s estimate. Overruling the CFO, Green wants to know which process requires a lower level of production to achieve his target profit.

Reference no: EM131793335

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