The Congress Company has identified two methods for producing playing cards. One

Question

The Congress Company has identified two methods for producing playing cards. One method involves using a machine having a fixed cost of $ 11,226 and variable costs of $ 0.40 per deck of cards. The other method would use a less expensive machine (fixed cost = $ 6,343 ), but it would require greater variable costs ($ 1.04 per deck of cards). If the selling price per deck of cards will be the same under each method, at what level of output will the two methods produce the same net operating income? Show your answer to the nearest whole number, do not include commas in your answer.

Explanation / Answer

Operating income of first process = (SP - 0.40)*units - 11,226....1

operating income of the second process = (SP - 1.04)*units - 6,343...2

butract 1 and 2

0.64 units = 4883

output level = 7,630

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.