A manager must decide how many machines of a certain type to purchase. Each mach

Question

A manager must decide how many machines of a certain type to purchase. Each machine can process 100 customers per day. One machine will result in a fixed cost of $2,200 per day, while two machines will result in a fixed cost of $3,900 per day. Variable costs will be $15 per customer, and revenue will be $45 per customer.

If estimated demand is 90 to 120 customers per day, how many machines should be purchased?

rev: 09_23_2014_QC_54044

A manager must decide how many machines of a certain type to purchase. Each machine can process 100 customers per day. One machine will result in a fixed cost of $2,200 per day, while two machines will result in a fixed cost of $3,900 per day. Variable costs will be $15 per customer, and revenue will be $45 per customer.

Explanation / Answer

BEP (Q) = 2200/(45-15)=73Two machines:BEP (Q) = 3900/(45—15)=130

b.If estimated demand is 90 to 120 customers per day, how many machines should be purchased?Since each machine can process 100 customers/day, 1 machine is good enough for the demand 90-120.

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