Explain choosing a new piece of equipment, Operation Management

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The following table shows the critical factors in a company's decision on choosing a new piece of equipment. Calculate the breakeven volume and utilization for each option and then find the range of volumes for which each option is the best decision.


Machine A

Machine B

Machine C

Fixed Costs/Month

$ 6,000.00

$ 17,000.00

$ 10,000.00

Variable Cost/Unit

$ 87.00

$ 51.00

$ 68.00

Revenue/Unit

$ 250.00

$ 250.00

$ 250.00

Capacity/Month

100

500

200

Breakeven Volume




Breakeven Utilization




Best Option Volume Range




min




max




 


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