Question

Weiss Mandtacturing inteods to incrense capacity by overcoming a bottenock operation by adding new equlpment. Two vendors tave prosentod proposais. The Eked costr are $30.000 far propocal The variable cot is $12.00 tor A and $10.00 for B. The reverue generated by ouch unt in $24.00.

a) The breakiven poich in oollars for the proposal by Vendor A=______

Answer 1

The break-even point in dollars for Vendor A's proposal is $60,000, calculated by dividing the fixed costs by the per unit contribution margin and then multiplying the result by the revenue per unit.

Step-by-step explanation:

Calculating the Break-Even Point in Dollars for Vendor A

To calculate the break-even point in dollars for a proposal by Vendor A, we use the formula: Break-even Point in Units = Fixed Costs ÷ (Price - Variable Cost per Unit). Weiss Manufacturing intends to increase capacity by adding new equipment, with Vendor A's proposal costing $30,000 (Fixed Costs) and the variable cost is $12.00 per unit.

Since the revenue generated by each unit is $24.00 (Price), the break-even point in units for Vendor A would be calculated as follows:

Break-even Point in Units for A = $30,000 ÷ ($24.00 - $12.00) = 2,500 units

To find the break-even point in dollars, we multiply the number of units by the price per unit. Therefore, for Vendor A:

Break-even Point in Dollars for A = 2,500 units × $24.00 = $60,000

Thus, Weiss Manufacturing would need to generate $60,000 in revenue to reach the break-even point for Vendor A's equipment.