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Q. You need to increase capacity of your manufacturing operation by adding new equipment. Two vendors have presented proposals. Summarized as follows:

Proposal A: FC = $50K, VC = $12/unit
Proposal B: FC = $70K, VC = $10/unit
Sales Revenue = $20.00 /unit sold

Draw graph to represent costs also revenue stream.

a. Calculate BEP for Proposal A?

b. Calculate BEP for Proposal B?

c. Over illustrate what range of volumes is each proposal lesser cost?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M9312552

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