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The following table shows the critical factors in a company's decision on choosing a new piece of equipment. Calculate the breakeven volume and utilization for each option and then find the range of volumes for which each option is the best decision.
Machine A
Machine B
Fixed Costs/Month
$ 20,000.00
$ 10,000.00
Variable Cost/Unit
$ 3.90
$ 4.25
Revenue/Unit
$ 21.00
$ 19.00
Capacity/Month
2500
1000
Breakeven Volume
Breakeven Utilization
Best Option Volume Range:
min
max
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For this discussion, let us put you in the department director chair, nursing director, lab director, radiology director, respiratory therapy director, or whichever hat fits best.
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