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ID: 363676 • Letter: E
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ent- Blackboard Learn https://umb.umassonline.net/bbcswebdav/pid-2496863-dt-content-rid-58611 1. Boston Seaport Manufacturing intends to increase capacity as a means to overcome a bottleneck in its new Production facility, by adding new equipment. Two vendors in the New England area have presented proposals The fixed costs for Proposal A are $50,000 with a variable cost of $12.00 the revenue generated for each unit is $20.00 The fixed costs for Proposal B are $70,000 with a variable cost of $10.00 the revenue generated for each unit Is $20.00 1A. What is the break-even point for proposal A? 1B. what is the break-even point for proposal B? 1C. What is the break-even point in Dollars for Proposal A if you add the $10,000 dollars installation charge to the fixed cost? 1D. What is the break-even point in Dollars for Proposal B if you add the $10,000 dollars installation charge to the fixed cost? 1E. What is the break-even point for Proposal A in both units and dollars, should the price per unit increase by 10967 1F. Boston Seaport Manufacture adds another proposal to the mix. Now, what is the percentage increase to the break-even point in Proposal A (Use yield from question 1E), should the variable costs rise by 40% and the fixed cost change to $45,0007 Note: Revenue is now upgraded to $25.00 What is the new breakeven point in units? what is the new breakeven point in dollars?Explanation / Answer
Proposal A -fixed cost is $50,000 and variable cost is $12.0 and revenue generated for each unit is $ 20.0
Fixed Costs ÷ (Price - Variable Costs) = Breakeven Point in Units
1A-Break even point for proposal A is = 50,000 ÷ (20-12) = 6250
1B-Proposal B -fixed cost is $70,000 and variable cost is $10.00 and revenue generated for each unit is $ 20.00
Break even point for proposal A is 70,000 ÷ (20-10) = 7000
1C- Breakeven point for Proposal A in dollars after adding $10,000--
Sales price per unit X Break Even points in Units
Now the new Break even point for Proposal A--- 60,000 ÷ (20-12) = 7500
In dollars it will be-- $7500 X $20 =$1,50,000
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