Nagle Electric, Inc., of Lincoln, Nebraska, must replace a robotic Mig welder an

Question

Nagle Electric, Inc., of Lincoln, Nebraska, must replace a robotic Mig welder and is evaluating two alternatives. Machine A has a fixed cost for the first year of $87,000 and a variable cost of $19, with a capacity of 13,000 units per year. Machine B is slower, with a speed of one-half of A's, but the fixed cost is only $65,000. The variable cost will be higher, at $23 per unit. Each unit is expected to sell for $30. a) What is the crossover point of indifference) for the two machines? The crossover point for the two machines is 5500 units. (Round your response to the nearest whole number.) b) What is the range of units for which machine A is preferable? Machine A is preferable at a level of production above units. (Enter your response as a whole number.)

Explanation / Answer

a) Crossover point = (87000-65000)/(23-19) = 5500 units

b) Machine A is preferred at a level of production above 5500 units

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

---

---

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