A small firm intends to increase the capacity of a bottleneck operation by adding a new machine. Two alternatives, A and
Posted: Sun Jul 03, 2022 3:17 pm
A small firm intends to increase the capacity of a bottleneckoperation by adding a new machine. Two alternatives, A and B, havebeen identified, and the associated costs and revenues have beenestimated. Annual fixed costs would be $40,000 for A and $30,000for B; variable costs per unit would be $10 for A and $12 for B;and revenue per unit would be $15.
If expected annual demand is 8,000 units, which alternativewould yield the higher profit?
If expected annual demand is 8,000 units, which alternativewould yield the higher profit?