Your company is manufacturing a complex part for a new baggage handling system f

Question

Your company is manufacturing a complex part for a new baggage handling system from an advanced material, and is considering an upgrade to the current machine. Two options are available -the breakeven analysis for both is shown in the graph. All answers, when appropriate, must include a value and units. 125E.06 -Option One Revenue (R) [s) 7.50E+05 2.50E+0 0.00E+00 O.0E+00 5.OE +04 1OE+05 1.SE+05 2OE+05 2 SE·05 Amount of Material Processed (A) [kg What is the variable cost of Option Two? A. $0.25/kg B. $1/kg C. $3/kg D. $4/kg

Explanation / Answer

VARIABLE COST IS GIVEN AS SLOPE OF THE RED LINE (OPTION TWO)

VERTICAL DISPLACEMENT = 0.5 AND CORRESPONDING HORIZONTAL DISPLACEMENT = 0.5

ANY TRIANGLE FORMED USING RED LINE AS HYPOTENUSE AND BLUE LINES OF GRAPH AS BASE AND PERPENDICULAR, VERTICAL AND HORIZONTAL DISPLACEMENT CAN BE KNOWN WHICH IS (0.5,0.5),(1,1), (1.5,1.5)....... HENCE SLOPE = (0.5/0.5) OR 1/1 OR 1.5/1.5 = 1 ( STRAIGHT LINE HENCE FIXED SLOPE)

HENCE VARIABLE COST = $1/ KG

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