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e Edit View History Bookmarks People Window Help 8 mework.aspx?homeworkid-4946602398questionid-118flushed-false&cld-5131005&centerwi. 100% Ea Wed Sep 5 11:47 AM Do Homework-Jinchun Shi Operations Management-4231-MSOM 3101-007, TR 11:00 am-1 Jinchun Shi & 9/5/18 11:47 AM Homework: Ch 7S - Capacity Mgmt Save Score: 0.6 of 1 pt 19 of 20 (20 complete) Hw Score: 93%, 18.6 of 20 pts & Problem 7.11 Question Help * Nagle Electric, Inc., of Lincoln, Nebraska, must replace a robotic Mig welder and is evaluating two alternatives. Machine A has a fixed cost for the first year of $79,000 and a variable cost of $17, with a capacity of 20,000 units per year. Machine B is slower, with a speed of one-half of A's, but the fixed cost is only $62,000. The variable cost will be higher, at $22 per unit. Each unit is expected to sell for $30. a) What is the crossover point (point of indifference) for the two machines? The crossover point for the two machines is 3400 units. (Round your response to the nearest whole number,) b) What is the range of units for which machine A is preferable? Machine A is preferable at a level of production above 3400 units. (Enter your response as a whole number.) c) What is the range of units for which machine B is preferable? Machine B is preferable at a level of production below units(Enter your response as a whole number) Enter your answer in the answer box and then click Check Answer Check Answer All parts showing Clear All

Explanation / Answer

C

As per the given data, the crossover point = X units

Then,

79000 + 17*X = 62000 + 22*X

X = (79000-62000)/(22-17)

X = 3400 units ( it is a crossover point)

So,

Machine B is preferable at a level of production below 3400 units.

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