Author Question: A shop wants to increase capacity by adding a new machine. The firm is considering proposals from ... (Read 157 times)

Starlight · **on:** Dec 3, 2019

A shop wants to increase capacity by adding a new machine. The firm is considering proposals from vendor A and vendor B. The fixed costs for machine A are $90,000 and for machine B, $75,000. The variable cost for A is $15.00 per unit and for B, $18.00. The revenue generated by the units processed on these machines is $22 per unit. If the estimated output is 9,000 units, which machine should be purchased?
◦ either machine A or machine B
◦ no purchase because neither machine yields a profit at that volume
◦ purchase both machines since they are both profitable
◦ machine A
◦ machine B

LP · **Reply #1 on:** Dec 3, 2019

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