A specified part can be obtained by either of two methods. Method A will have fixed costs of $40,000 per year and a variable cost of $20 per unit. Method B will have fixed costs of $60,000 per year and a variable cost of $15 per unit. The number of units that must be produced each year for the two methods to be equally attractive is closest to

A specified part can be obtained by either of two methods. Method A will have fixed costs of $40,000 per year and a variable cost of $20 per unit. Method B will have fixed costs of $60,000 per year and a variable cost of $15 per unit. The number of units that must be produced each year for the two methods to be equally attractive is closest to

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 5P: Hudson Corporation is considering three options for managing its data warehouse: continuing with its...

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Sub. General Account
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Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?
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Currently, the unit selling price is $50, the variable cost, $34, and the total fixed costs, $108,000. A proposal is being evaluated to increase the selling price to $54. (a) Compute the current break-even sales (units). (b) Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant.
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