Question
In: Accounting
Sroufe Manufacturing intends to increase capacity by overcoming a bottleneck operation by adding new equipment.
Sroufe 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 $70,000 for proposal B. The variable cost is $12.00 for A and $10.00 for B. The revenue generated by each unit is $20.00,
a) The break-even point in units for the proposal by Vendor A-units (enter your response as a whole number).
Solutions
Expert Solution
Solution:
We know the fixed cost for proposal A is $50,000, Variable cost is $12.00 and Revenue per unit is $20.00.
Therefore, the break-even point is:
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