A manufacturing firm is considering three alternatives for automation. They anticipate the annual production volume to be 7,000 units. The costs for each alternative are as shown:
$\begin{array}{|l|c|c|c|}
\hline &&{\text { Alternative }} \
\hline & 1 & 2 & 3 \
\hline \text { Annual Fixed Costs } & 50,000 & \$ 190,000 & \$ 350,000 \
\hline \text { Variable Cost/Unit } & \$ 0.65 & \$ 0.55 & \$ 0.40 \
\hline
\end{array}$
a.What sales price must be charged for Alternative 1 to break even?
b.What sales price must be charged for Alternative 2 to break even?
c.What sales price must be charged for Alternative 3 to break even?

Question

A manufacturing firm is considering three alternatives for automation. They anticipate the annual production volume to be 7,000 units. The costs for each alternative are as shown:
 $\begin{array}{|l|c|c|c|}
\hline &&{\text { Alternative }} \
\hline & 1 & 2 & 3 \
\hline \text { Annual Fixed Costs } & 50,000 & \$ 190,000 & \$ 350,000 \
\hline \text { Variable Cost/Unit } & \$ 0.65 & \$ 0.55 & \$ 0.40 \
\hline
\end{array}$ 
a.What sales price must be charged for Alternative 1 to break even?
b.What sales price must be charged for Alternative 2 to break even?
c.What sales price must be charged for Alternative 3 to break even?

Quizplus · Accepted Answer

The Answer of A manufacturing firm is considering three alternatives for automation. They anticipate the annual production volume to be 7,000 units. The costs for each alternative are as shown:
 $\begin{array}{|l|c|c|c|}
\hline &&{\text { Alternative }} \
\hline & 1 & 2 & 3 \
\hline \text { Annual Fixed Costs } & 50,000 & \$ 190,000 & \$ 350,000 \
\hline \text { Variable Cost/Unit } & \$ 0.65 & \$ 0.55 & \$ 0.40 \
\hline
\end{array}$ 
a.What sales price must be charged for Alternative 1 to break even?
b.What sales price must be charged for Alternative 2 to break even?
c.What sales price must be charged for Alternative 3 to break even?

A Manufacturing Firm Is Considering Three Alternatives for Automation AWhat Sales Price Must Be Charged for Alternative 1 to Anticipate