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Range on process selection using breakeven analysis

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Reference no: EM131210169

Process Selection: A manufacturer of parts has the following choices for producing a part: (i) Make the part using automated equipment (fixed cost = $150,000, variable cost per unit = $20), or (ii) Make the part using low-tech equipment (fixed cost = $50,000, variable cost per unit = $60). Annual demand for the part is estimated to be in the range of 2,400-2600 units.

  1. Can breakeven analysis can be used to assist in the process selection decision?
  2. What are limitations of using breakeven analysis?
  3. Discuss the effects of volume (demand) range  on process selection using breakeven analysis.

Reference no: EM131210169

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