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When comparing Alternative A to Alternative B, B is more attractive than A above units.

When comparing Alternative A to Alternative B, B is more attractive than A above units.

Practical Management Science
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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An operations manager is deciding on the level of automation for a new process. The fixed cost for automation includes the equipment purchase price, installation, and initial spare parts. The variable costs per unit for each level of automation are primarily labor related. Each unit can be sold for $86. As in many cases, you have the default alternative of doing nothing ($0 fixed cost, $0 variable costs). When comparing Alternative A to Alternative B, B is more attractive than A above DO NOT INCLUDE A COMMA. Round your answer to the nearest whole number and do not include units or a comma. For example, submit 12450 and NOT 12,450. Alternative Fixed Costs A B с units. $100,000 $284,000 $560,000 Variable Costs per Unit $54 $44 $20 Hint: For these questions, also consider the "Do Nothing" option as a viable option when making your decision.
Transcribed Image Text:An operations manager is deciding on the level of automation for a new process. The fixed cost for automation includes the equipment purchase price, installation, and initial spare parts. The variable costs per unit for each level of automation are primarily labor related. Each unit can be sold for $86. As in many cases, you have the default alternative of doing nothing ($0 fixed cost, $0 variable costs). When comparing Alternative A to Alternative B, B is more attractive than A above DO NOT INCLUDE A COMMA. Round your answer to the nearest whole number and do not include units or a comma. For example, submit 12450 and NOT 12,450. Alternative Fixed Costs A B с units. $100,000 $284,000 $560,000 Variable Costs per Unit $54 $44 $20 Hint: For these questions, also consider the "Do Nothing" option as a viable option when making your decision.
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Breakeven point = fixed cost/(selling price-variable cost)

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