a) What is the break-even point for the manual process (in units)? b) What is the break-even point for the mechanized process (in units)? c) A point of indifference for two processes is quantity at which each process generates the same amount of profit (review video). What is the point of indifference for the two processes? (Hint: 1) Use equations to set profit of manual process equal to mechanized process - and solve for quantity; 2) (Excel) If you have a break-even for each process – have only one cell that represents quantity that be used to calculates costs/revenues for each process and use Goal Seek to calculate quantity that would set the difference to zero). d) Which process would you select if the quantity that is sold is greater than the quantity calculated as the point of indifference? e) Which process would you select in the quantity sold is less than the quantity calculated as the point of indifference?
a) What is the break-even point for the manual process (in units)? b) What is the break-even point for the mechanized process (in units)? c) A point of indifference for two processes is quantity at which each process generates the same amount of profit (review video). What is the point of indifference for the two processes? (Hint: 1) Use equations to set profit of manual process equal to mechanized process - and solve for quantity; 2) (Excel) If you have a break-even for each process – have only one cell that represents quantity that be used to calculates costs/revenues for each process and use Goal Seek to calculate quantity that would set the difference to zero). d) Which process would you select if the quantity that is sold is greater than the quantity calculated as the point of indifference? e) Which process would you select in the quantity sold is less than the quantity calculated as the point of indifference?
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter10: Cost Analysis For Management Decision Making
Section: Chapter Questions
Problem 11P: Emerald Island Company is considering building a manufacturing plant in County Kerry. Predicting...
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