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Markland Manufacturing - Break-even Points For Two Proposals

Please answer the problem below and show the work-steps to how the answers were derived.
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Markland Manufacturing intends to increase capacity by overcoming a bottleneck operation by adding 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 $12.00, and for B, $10.00. The revenue generated by each unit is $20.00.

a. What is the break-even point in dollars for proposal A, if you add $10,000 installation to the fixed cost?
b. What is the break-even point in dollars for proposal B, if you add $10,000 installation to the fixed cost?

Solution Preview

Proposal A:

Cost = 50000 + 10000 + 12x, where x = Number of units produced

Cost = 60000 + 12x

Revenue = 20x

For ...

Solution Summary

Break-even points have been calculated for the two new proposals.

$2.19