What is the probability that you will make money

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Reference no: EM1392275

Problem 1 -

A firm is considering three capacity alternatives: A, B, and C. Alternative A would have an annual fixed cost of $100000 and variable costs of $22 per unit. Alternative B would have annual fixed costs of $125000 and variable costs of $26 per unit. Alternative C would have fixed costs of $89000 and variable costs of $31 per unit. Revenue is expected to be $54 per unit.

Compute all three Breakeven Points. What is the value of the lowest break-even quantity?
(No Commas)

Compute the Profit for 18000 units for all three alternatives. What is the highest profit that could be made for an annual output of 18000 units?
(Leave off Dollar Sign %u2026 No Commas)

For each alternative, compute the volume required to generate a profit of $60000. What is the lowest volume of output required to generate an annual profit of $60000?
(No Commas)

Problem 2 -
The owner of Firewood-2-Go is considering buying a hydraulic wood splitter which sells for $50000. He figures it will cost an additional $80 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $100.

Demand for cords of wood can be modeled by using a Normal Distribution with a Mean of 2560 units and a Standard Deviation of 60 units. What is the Probability that you will make money using this machine?

Reference no: EM1392275

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