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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 are $ 50,000 for proposal A and $ 70,000 for proposal B. The variable cost is $ 12.00 for A and $ 10.00 for B. The revenue generated by each unit is $ 20.00.a. What is the break-even in the unit proposal A?b. What is the break-even in the unit proposal B?

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Answer:

Instructions are listed below.

Explanation:

Giving the following information:

The fixed costs are $ 50,000 for proposal A and $ 70,000 for proposal B. The variable cost is $ 12.00 for A and $ 10.00 for B. The revenue generated by each unit is $ 20.00.

The break-even formula is:

Break-even point= fixed costs/ contribution margin

A) Break-even point= 50,000/ (20 - 12)= 6,250 units

B) Break-even point= 70,000/ (20 - 10)= 7,000 units

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