Assume that you and your brother plan to open a business that will make and sell
ID: 2679185 • Letter: A
Question
Assume that you and your brother plan to open a business that will make and sell a newly designed type of sandal. Two robotic machines are available to make the sandals, Machine A and Machine B. The price per pair will be $19.50 regardless of which machine is used. The fixed and variable costs associated with the two machines are shown below. What is the difference between the breakeven points for Machines A and B? (Hint: Find BEB - BEA)Machine A
Machine B
Price per pair (P)
$19.50
$19.50
Fixed costs (F)
$25,000
$100,000
Variable cost/unit (V)
$7.00
$4.00
Explanation / Answer
Breakeven points: Difference in cost between Machine A and B for making sandals "Assume that you and your brother plan to open a business that will make and sell a newly designed type of sandal. Two robotic machines are available to make the sandals, Machine A and Machine B. The price per pair will be $19.50 regardless of which machine is used. The fixed and variable costs associated with the two machines are shown below. What is the difference between the breakeven points for Machines A and B? (Hint: Find BEB - BEA) Machine A Machine B Price per pair (P) $19.50 $19.50 Fixed costs (F) $25,000 $100,000 Variable cost/unit (V) $7.00 $4.00 a. 3,784 b. 4,318 c. 3,739 d. 4,674 e. 4,452