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, when appropriate, must include a value and units. 12SE0e -Option One Revenue (R) [si L0OE+0 7.S0E+0 2.50E+0 O OE+00 S.OE+04 OE+05 1 SE+05 2.OE+05 2.SE+05 Amount of Material Processed (A) [kg) At 200,000 kilograms of material processed, which option will generate more profit? A. Option One B. Option Two C. They will both generate the same amount of profit D. Neither option will generate a profit-they are both operating at a loss

Explanation / Answer

In the option 1 there is total cost of revenue is more increasing than the option 2. So the break even point occur when reaches total cost to the total production. But in these both of the options there is chance to reach break even point, but in option 2 there is much more chances than in option 1. so we may take option 2 as best to gain profits. Revenue reaches option 2 just at 100,000 but in case of option 1 it is at 150,000. So to produce the 200,000 kiliograms of material processed we can observe that the option 2 will generate more profit. Since it produces more products in a short periods.

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