Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Nagle Electric, Inc., of Lincoln, Nebraska, must replace a robotic Mig welder and is evaluating two alternatives. Machine A has a fixed cost for the first year of $82,000
and a variable cost of $14, with a capacity of 21,000 units per year. Machine B is slower, with a speed of one-half of A's, but the fixed cost is only $59,000. The variable
cost will be higher, at $18 per unit. Each unit is expected to sell for $25.
a) What is the crossover point (point of indifference) for the two machines?
The crossover point for the two machines is units. (Round your response to the nearest whole number.)
b) What is the range of units for which machine A is preferable?
Machine A is preferable at a level of production
units. (Enter your response as a whole number.)
c) What is the range of units for which machine B is preferable?
Machine B is preferable at a level of production
units. (Enter your response as a whole number.)
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Transcribed Image Text:Nagle Electric, Inc., of Lincoln, Nebraska, must replace a robotic Mig welder and is evaluating two alternatives. Machine A has a fixed cost for the first year of $82,000 and a variable cost of $14, with a capacity of 21,000 units per year. Machine B is slower, with a speed of one-half of A's, but the fixed cost is only $59,000. The variable cost will be higher, at $18 per unit. Each unit is expected to sell for $25. a) What is the crossover point (point of indifference) for the two machines? The crossover point for the two machines is units. (Round your response to the nearest whole number.) b) What is the range of units for which machine A is preferable? Machine A is preferable at a level of production units. (Enter your response as a whole number.) c) What is the range of units for which machine B is preferable? Machine B is preferable at a level of production units. (Enter your response as a whole number.)
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