Purchase Solution

Fred's Fabrication: Where is the crossover between Machine A

Not what you're looking for?

Ask Custom Question

Question 10: Fred's Fabrication, Inc. wants to increase capacity by adding a new machine. The firm is considering proposals from vendor A and vendor B. The fixed costs for machine A are $90,000 and for machine B, $70,000. The variable cost for A is $9.00 per unit and for B, $14.00. The revenue generated by the units processed on these machines is $20 per unit. The crossover between machine A and machine B is:

a) 4,000 units, with A more profitable at low volumes
b) 4,000 dollars, with A more profitable at low volumes
c) 4,000 units, with B more profitable at low volumes
d) 4,000 dollars, with B more profitable at low volumes
e) none of these

Please select the right answer and provide explanation on how you have calculated it.

Purchase this Solution
Solution Summary

This solution is comprised of a detailed explanation to answer where is the crossover between Machine A and Machine B.

Solution Preview

Question 10: Fred's Fabrication, Inc. wants to increase capacity by adding a new machine. The firm is considering proposals from vendor A and vendor B. The fixed costs for machine A are $90,000 and for machine B, $70,000. The variable cost for A is $9.00 per unit and for B, $14.00. The revenue ...

Purchase this Solution
Free BrainMass Quizzes
Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

View More Free Quizzes
Related BrainMass Solutions

  • Managerial Accounting

    15% 100% Depreciation...........15% 35% 50% 100% Occupancy.............. 5% 70% 25% 100% The activity rate for the FABRICATION activity cost pool is closest to: A)$3.30 per machine hour B

  • Manufacturing overhead

    In the Fabrication department, Huang uses a predetermined overhead rate of $29 per machine-hour. In the Assembly department, Huang uses a predetermined overhead rate of $14 per direct labor-hour.

  • Management Accounting for Sweditrak Corporation: Proposed AB

    The company is considering implementing and activity-based costing system using machine hours as the cost driver for MNT cost and inspection hours as the cost driver for QLC cost. A.

  • Standard deviation: What is the statistical safety stock?

    The firm is considering proposals from vendor A and vendor B. The fixed costs for machine A are $90,000 and for machine B, $75,000. The variable cost for A is $15.00 per unit and for B, $18.00.

  • Identifying the crossover rate in the given case

    If the cost of capital is below the crossover rate, conflict is bound to occur between the rankings of the NPV and IRR of mutually exclusive projects. If the cost of capital is above the crossover rate, both methods i.e.

  • Cost Allocation :Activity Based Costing

    Please see the attached file. 25-1 Spacely Company's Fabrication Department incurred $125,000 of factory overhead cost in producing gears and sprockets. The two products consumed a total od 4,000 direct machine hours.

  • Four Types of Performance Assessment Approaches

    Let's take a look at straight ranking, BARS, MBO, and the 360 review process. Then, we will make a determination of what performance assessment approach is best for Southwest Steel Fabrication.

  • Digital Fabrication

    These are exactly the differences between an analog system (the continuous deposition of the 3-D printer) and a digital one (the LEGO assembly). The digitization of material is not a new idea.

  • Efficiency of a System & Equipment Purchase

    * A fabrication company wants to increase capacity by adding a new machine. The firm is considering proposals from vendor A and vendor B. The fixed costs for machine A are $90,000 and for machine B, $75,000.

View More Related Solutions