0207-678: Creating Value with Operations and Supply Chain Zi Wang &I 9/19/18 4:0
ID: 1137916 • Letter: 0
Question
0207-678: Creating Value with Operations and Supply Chain Zi Wang &I 9/19/18 4:01 PM Homework: Supplement A Homework Score: 0 of 1 pt Problem 5 Spartan Castings must implement a manufacturing process that reduces the amount of particulates emitted into the atmosphere. Two processes have been identified 1 of 9 0 HW Score: 0%, 0 of 9 Help that provide the same level of particulate reduction. The first process is expected to incur $160,000 of fixed cost and add $60 of variable cost to each casting Spartan a. What is the break-even quantity beyond which the first process is more attractive? The break-even quantity is castings. (Enfer your response as an integer) or 07Explanation / Answer
ANSWER:
fixed cost of 1st process = $160,000
variable cost of 1st process per unit = $60
let the no of unit be x
total variable cost of 1st unit = 60x
fixed cost of 2nd process = $100,000
variable cost of 2nd process per unit = $80
let the no of unit be x
total variable cost of 2nd unit = 80x
break even quantity = (fixed cost of 1st process - fixed cost of 2nd process) / ( variable cost of 2nd process - variable cost of 1st unit)
break even quantity = (160,000 - 100,000) / (80 - 60)
break even quantity = 60,000 / 20 = 3,000
the break even quantity is 3,000
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