Determine the annual breakeven quantity for the (a) Current system and (b) the new system. (b) Plot the two profit relations and estimate graphically the breakeven quantity between the two alternatives. (c) Mathematically determine the breakeven quantity between the two alternatives and compare it with the graphical estimate
Wilson Partners manufactures thermocouples for electronics applications. The current system has a fixed cost of $300,000 per year, has a variable cost of $10 per unit, and sells for $14 per unit. A newly proposed process will add on-board features that allow the revenue to increase to $16 per unit, but the fixed cost will now be $500,000 per year. The variable cost will be based on a $48 per hour rate with 0.2 hour dedicated to produce each unit. Determine the annual breakeven quantity for the (a) Current system and (b) the new system. (b) Plot the two profit relations and estimate graphically the breakeven quantity between the two alternatives. (c) Mathematically determine the breakeven quantity between the two alternatives and compare it with the graphical estimate
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