Determine the break-even point

Assignment Help Business Management
Reference no: EM133040717

A manufacturing firm is considering the following capacity planning approach in the production of their new product. Each machine can produce only 2000 units/year, and the firm can buy up to 2 machines (we assume that all machines are identical). The selling price of each unit of the product is $30/unit. In order to produce one unit of the product, the variable cost is $20/unit. Fixed investment costs indicated for 2 machines is not the incremental cost, but the total fixed investment cost. For example, 2-machine has a total fixed cost of $12,000/yr, not $20,000.

Output Range/year

Fixed Cost/year

0-2000 (1 machine)

$8,000

2001-4000 (2 machines)

$12,000

a. If the firm buys one machine, then determine the break-even point.

b. If the firm buys two machines, then determine the break-even point.

c. Suppose that the excess demand can be lost without any penalty. Determine all possible production volumes in the range of (1000, 4000] such that it is optimal to buy two machines.

d. What volume of output will be required to achieve a profit of $16,000 if the optimal capacity decision is made?

Reference no: EM133040717

Questions Cloud

Principles of management : 1. What did you like the best about this course Principles of Management?
Assignment on enterprise resource planning : Enterprise resource planning (ERP) is a repository of a corporation's data for any transaction that occurs. The resulting data collected in any business process
Conventional economic theory : Economic behavior is more complex than assumed by conventional economic theory. Political economy explains the functioning of government.
How much money should the company invest in each stock : The consultations further revealed that stock A with a return of 15% has a beta of 0.8. How much money should the company invest in each stock
Determine the break-even point : A manufacturing firm is considering the following capacity planning approach in the production of their new product. Each machine can produce only 2000 units/ye
Correlation between day and weight : Suppose that you work for a cosmetics company and would like to know how the weight of a particular brand of soap changes over time. The table below shows the m
How are control assessments established in audit : 1. Please thoroughly discuss 2 key criteria material to audit objectives.
Assignment on data breaches and security : With the help of recent data breaches in the news, please brief on what you think HR departments need to do to keep the data safe.
Examines the role of information systems in business : Examines the role of information systems in business and other types of organisations - Critically evaluate how technology can enable an organisation's

Reviews

Write a Review

Business Management Questions & Answers

  Information to other managers or investors

Explain what you enjoyed about this course, as well as what you did not find as beneficial. Do you feel more knowledgeable regarding multinational companies.

  Importance to an international manager

One of the first issues the chapter addresses is the rule of law. Explain this concept's importance to an international manager.

  Is crash liable for any of these contracts

Fred has no idea whether Steve is representing anyone. Is Crash liable for any of these contracts? Is Steve liable for any of these contracts?

  How can the federal reserve system change

How can the Federal Reserve System change the money supply without engaging in open market operations?

  Decision-making process to make business decisions

How can managers use the evidenced-based decision-making process to make business decisions? Give an example.

  What is the current share price

The company will maintain this dividend for the next 15 years and will then cease paying dividends forever. If the required return on this stock is 13 percent

  Develop an effective strategy

Given this dilemma, how would you develop an effective strategy to ensure you act in the best interests of your company

  Managing internal weaknesses and external threats

Explain how management uses the strategic planning process to overcome its internal weaknesses and its external threats.

  Research proposal for the marketing director

Design a formal research proposal for the Marketing Director, in­dicating the title of each section and specifically including important content which relates directly to your research undertaking.

  Advantages of nuclear power

The generation of electricity through nuclear energy reduces the amount of energy generated from fossil fuels (coal and oil). Less use of fossil fuels

  The number of baby-boomers that are reaching retirement age

the number of baby-boomers that are reaching retirement age is growing almost exponentially each year. older citizens

  Improve a project budget or resource cost plans

Discuss why a key motive for any project manager is the identification of opportunities that can improve a project's budget or resource cost plans. support your discussion of how a Project Manager could utilize such an opportunity to limit ‘scope..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd