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Help with a question please

  • 06-05-2018 03:56PM
    #1
    thebadguy88
    Registered Users, Registered Users 2 Posts: 109 ✭✭


    Hi There

    Just wondering would anyone be able to help me with the following question

    1. A manufacturing company must replace its machine and is assessing the capabilities of two available production machines. Machine 1 would cost $75,000 in fixed costs for the first year. Each product produced using Machine 1 would have a variable cost of $16. Machine 2 would have a first-year fixed cost of $62,000, and products made on this machine would have a variable cost of $20. Machine 1 would have the capacity to make 18,000 products per year, which is approximately double the capacity for Machine 2.
    (a) If products sell for $28 each, find the break-even point for each machine. Consider first-year costs only.
    (b) If the manufacturing company estimates a demand of 6,500 units in the next year, which machine should be selected?
    (c) At what level of production do the two production machines cost the same?

    Its a new topic in college and no solution has been given , the question isnt being graded but I just want to know to tackle it correctly


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