Question

Sroufe Manufacturing intends to increase capacity by overcoming a bottieneck operation by adding new equipment. Two vendors have presented proposals. The fixed costs are $55,000 for proposal A and $80,000 for proposal B. The variable cost is $13.00 for A and $9.00 for The revenue generated by each unit is $24.00.

The break-even point in units for the proposal by Vendor A= units (round your response to the nearest whole number).

Answer 1

The break-even point for Vendor A's proposal is 5,000 units. This is calculated using the fixed costs, variable cost per unit, and revenue per unit, with the formula: Fixed Costs / (Revenue per Unit - Variable Cost per Unit).

Step-by-step explanation:

The student is asking for the break-even point in units for a proposal from vendor A. To find the break-even point, we can use the break-even formula, which is the fixed costs divided by the price per unit minus the variable cost per unit. For vendor A, the fixed cost is $55,000, the variable cost per unit is $13, and the revenue per unit is $24.

To calculate the break-even point for proposal A:

Break-Even Point (units) = Fixed Costs / (Revenue per Unit - Variable Cost per Unit)

So for proposal A:

Break-Even Point (units) = $55,000 / ($24 - $13) = $55,000 / $11 = 5000 units

The break-even point for Vendor A is 5,000 units.