A small firm intends to increase the capacity of a bottleneck operation by adding a new machine. Two alternatives, A and B, have been identified, and the associated costs and revenues have been estimated. Annual fixed costs would be $36,000 for A and $31,000 for B; variable costs per unit would be $7 for A and $11 for B; and revenue per unit would be $18. a. Determine each alternative’s break-even point in units. (Round your answer to the nearest whole amount.) b. At what volume of output would the two alternatives yield the same profit (or loss)? (Round your answer to the nearest whole amount.) c. If expected annual demand is 15,000 units, which alternative would yield the higher profit (or the lower loss)? **Problem 5-4 (Algo)**A small firm intends to increase the capacity of a bottleneck operation by adding a new machine. Two alternatives, A and B, have been identified, and the associated costs and revenues have been estimated. Annual fixed costs would be $36,000 for A and $31,000 for B; variable costs per unit would be $7 for A and $11 for B; and revenue per unit would be $18.a. Determine each alternative’s break-even point in units. *(Round your answer to the nearest whole amount.)*- QBEP,A: \_\_\_ units- QBEP,B: \_\_\_ unitsb. At what volume of output would the two alternatives yield the same profit (or loss)? *(Round your answer to the nearest whole amount.)*- Q: \_\_\_ unitsc. If expected annual demand is 15,000 units, which alternative would yield the higher profit (or the lower loss)?- Higher profit: \_\_\_

The Breakeven Point is that level of sales at which there is no profit or no loss. In other words at…

Answered: A small firm intends to increase the…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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A small firm intends to increase the capacity of a bottleneck operation by adding a new machine. Two alternatives, A and B, have been identified, and the associated costs and revenues have been estimated. Annual fixed costs would be $36,000 for A and $31,000 for B; variable costs per unit would be $7 for A and $11 for B; and revenue per unit would be $18.

a. Determine each alternative’s break-even point in units. (Round your answer to the nearest whole amount.)

b. At what volume of output would the two alternatives yield the same profit (or loss)? (Round your answer to the nearest whole amount.)

c. If expected annual demand is 15,000 units, which alternative would yield the higher profit (or the lower loss)?