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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A specified part can be obtained by either of two methods. Method 1 will have fixed costs of $75,000 per year and a variable cost of $25 per unit. Method 2 will have fixed costs of $90,000 per year and a variable cost of $17 per unit. The number of units that must be produced each year for the two methods to be equally attractive is closest to _.
Subject:- General Account
Sub. General Account
A firm is trying to decide between two location alternatives, Albany and Baltimore. Albany would result in annual fixed costs of $60,000, labor costs of $7 per unit, material costs of $10 per unit, transportation costs of $15 per unit, and revenue per unit of $50. Baltimore would have annual fixed costs of $80,000, labor costs of $6 per unit, material costs of $9 per unit, transportation costs of $14 per unit, and revenue per unit of $48. (A) At an annual volume of 9,000, which would yield the higher profit? (B) At what annual volume would management be indifferent between the two alternatives in terms of annual profits?
Three mutually exclusive design alternatives are being considered. The estimated sales and cost data for each alternative are given. The MARR is 20% per year. Annual revenues are based on the number of units sold and the selling price. Annual expenses are based on fixed and variable costs. Determine which selection is preferable based on AW. State your assumptions.
A firm is considering two location alternatives. At location A, fixed costs would be $4,000,000 per year, and variable costs $0.30 per unit. At alternative B, fixed costs would be $3,600,000 per year, with variable costs of $0.34 per unit. If annual demand is expected to be 9 million units, which plant offers the lowest total cost? Plant B, because it has the lower variable cost per unit. Plant A, because it is cheaper than Plant B for all volumes below 10,000,000 units. Plant A, because it is cheaper than Plant B for all volumes. Plant B, because it is cheaper than Plant A for all volumes below 10,000,000 units. Neither Plant A nor Plant B, because the crossover point is at 9 million units.
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Use the breakeven model to determine which of the statements below is TRUE according to the information provided in the table relating to two different locations considered for a new manufacturing facility. LOCATION ANNUAL FIXED COSTS UNIT VARIABLE COSTS Site A $120,000 Site B $110,000 a. The breakeven point for these two locations is 909 units per year b Se B is the desired location if the production rate is 1000 units per year The breakeven point for these two locations is 625 units per year d Ste A is the desired location if the production rate is 500 mits per year $18 $29
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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Assume that a manufacturer can purchase a needed component from a supplier at a cost of $9.50 per unit, or it can invest $60,000 in equipment and produce the item at a cost of $7.00 per unit. (a) Determine the quantity for which total costs are equal for the make and buy alternatives. (b) What is the minimum cost alternative if 15,000 units are required? What is the minimum cost? (c) If the number of units required of the component is close to trhe break even quantity, what factors might might influence the final decision to make or buy
What will be the total annual variable costs ?