Overcoming bottleneck operation by adding new equipment

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Reference no: EM132134915

Markland Manufacturing intends to increase capacity by overcoming a bottleneck operation by adding new equipment. Two vendors have presented proposals. The fixed costs are $ 50,000 for proposal A and $ 80,000 for proposal B. The variable cost is $ 12.00 for A and $ 10.00 for B. The revenue generated by each unit is $ 24.00. HINT: Find the crossover point where costs are the same for both options. Set up your total cost formula for each option with number of units as the variable. Make the two formula's equal and solve for units. See Blackboard for an example of this type of problem. Vendor A and Vendor B have the same cost when the output volume = nothing units (round your response to the nearest whole number).

Reference no: EM132134915

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