Assume that you and your brother plan to open a business that will make and sell

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
Answer
3,784
4,318
3,739
4,674
4,452

Explanation / Answer

So it's (P-V)/F (19.5-100)/4-(19.5-7)/25=-20.65

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