ent Blackboard Learn https://umb.umassonline.net/bbcswebdav/pid-2496863-dt-conte
ID: 363842 • Letter: E
Question
ent Blackboard Learn https://umb.umassonline.net/bbcswebdav/pid-2496863-dt-content-rid-58611 1. Boston Seaport Manufacturing intends to increase capacity as a means to overcome a bottleneck in its new Production facility, by adding new equipment. Two vendors in the New England area have presented proposals . The fixed costs for Proposal A are $50,000 with a variable cost of $12.00 the revenue generated for each unit is $20.00 The fixed costs for Proposal B are $70,000 with a variable cost of $10.00 the revenue generated for each unit Is $20.00 1A. What is the break-even point for proposal A? 1B. what is the break-even point for proposal B? 1C. What is the break-even point in Dollars for Proposal A if you add the $10,000 dollars installation charge to the fixed cost?- 1D. What is the break-even point in Dollars for Proposal B if you add the $10,000 dollars installation charge to the fixed cost? 1E. What is the break-even point for Proposal A in both units and dollars, should the price per unit increase by 109%7 1F. Boston Seaport Manufacture adds another proposal to the mix. Now, what is the percentage increase to the break-even point in Proposal A (Use yield from question 1E), should the variable costs rise by 40% and the fixed cost change to $45,0007 Note: Revenue is now upgraded to $25.00 What is the new breakeven point in units? what is the new breakeven point in dollars?Explanation / Answer
1A. Breakeven point for proposal A = Fixed cost / (Revenue - Variable cost) = 50000/(20-12) = 6250
1B. Breakeven point for proposal B = Fixed cost / (Revenue - Variable cost) = 70000/(20-10) = 7000
1C. Breakeven point for proposal A = (Fixed cost + Installation charge) / (Revenue - Variable cost) = (50000+10000)/(20-12) = 7500
1D. Breakeven point for proposal B = (Fixed cost + Installation charge) / (Revenue - Variable cost) = (70000+10000)/(20-10) = 8000
1E. New unit price after 10% increase = 20*(1+10%) = 22
New breakeven point in units = 50000/(22-12) = 5000 units (installation charge is not considered here)
Breakeven point in dollars = 5000*22 = $ 110,000
1F. New variable cost = 12*(1+40%) = 16.8
New breakeven point in units = 45000/(25-16.8) = 5488 units
New breakeven point in dollars = 5488*25 = $ 137,200
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.