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Overcoming a Bottleneck Operation

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Markland Manufacturing intends to increase capacity by overcoming a bottleneck operation through the addition of new equipment. Two vendors have presented proposals. The fixed costs for proposal A are $50,000, and for proposal B, $70,000. The variable cost for A is $15.00, and for B, $6.00. The revenue generated by each unit is $20.00.

What is the break-even point in units for proposal A?

____________ units
Round your answer to the nearest whole number; for example, 1234 .

What is the break-even point in units for proposal B?

____________ units
Round your answer to the nearest whole number; for example, 1234 .

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Solution Summary

This solution calculates the break-even point for Proposal A and B by using the fixed costs and variables costs.

$2.19