Solution-At what volume of output two alternatives yield

At what volume of output two alternatives yield same profit

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Question - A small firm intends to increase the capacity of a bottleneck operation by adding a new machine. Two alternatives, A and B, have been identified, and the associated costs and revenues have been estimated. Annual fixed costs would be $36,000 for A and $31,000 for B; variable costs per unit would be $7 for A and $11 for B; and revenue per unit would be $18.

a. At what volume of output would the two alternatives yield the same profit (or loss)?

b. If expected annual demand is 15,000 units, which alternative would yield the higher profit (or the lower loss)?

Reference no: EM133015077

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At what volume of output two alternatives yield same profit

Reference no: EM133015077

Reference no: EM133015077

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