Quatro Hermanas is investigating implementing some new production machinery as p

Question

Quatro Hermanas is investigating implementing some new production machinery as part of its operations. Three alternatives have been identified, and they have the following fixed and variable cost:
Alternative A) (annual fixed cost: $100,000 annual variable cost per unit:$20.00)
Alternative B) (annual fixed cost: $200,000 annual variable cost per unit:$5.00)
Alternative C) (annual fixed cost: $150,000 annual variable cost per unit:$7.50)
Determine the ranges of production ( units produced per year) over which each alternative would be recommended up to 30,000 units per year

Explanation / Answer

so first we start with A. now find when A and C are equal 100000+20*x=150000+7.5*x 12.5x=50000, so x=4000 find when B and C are equal 150000+7.5*x=200000+5*x 2.5x=50000 x=20000 so 0 to 4000 choose A 4000 to 20000 choose B 20000 and up choose C

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