a. Determine each alternative’s break-even point in units. (Round your answer to the nearest whole amount.)
QBEP,A ____ units
QBEP,B _____units
b. At what volume of output would the two alternatives yield the same profit? (Round your answer to the nearest whole amount.)
Profit ____units
c. If expected annual demand is 11,000 units, which alternative would yield the higher profit? A or B?
Tag: at what volume of output would the two alternatives yield the same profit?
Expert Answer
Answer:- The break even for A is given by:-
36000+8x = 16x
8x =36000
x=4500
The break even for B is given as:-
31000+11x = 16x
5x=31000
x =6200
So, for A:- 4500 unit, B:- 6200 units
Answer:- The equal profit will be obtained when
36000+8x = 31000+11x
3x = 5000
x = 1666.67 units
Answer;- when annual demand is 11000 units
then for A:-
Profit= 11000*16 – 36000 – 8*11000
Profit= 176000-36000-88000
Profit= 52000
For B:-
Profit= 11000*16 -31000-11*11000
Profit= 24000
So option A provides greater profits.
Tag: at what volume of output would the two alternatives yield the same profit?
