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Blababa [14]
3 years ago
5

Markland Manufacturing intends to increase capacity by overcoming a bottleneck operation by adding new equipment. Two vendors ha

ve 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. Vendor A and Vendor B have the same cost when the output volume​ = ____ units ​(round your response to the nearest whole​ number).
Business
1 answer:
liraira [26]3 years ago
8 0

Answer:

The indifference point is 10,000 units.

Explanation:

Giving the following information:

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.

Proposal A= 50,000 + 12*x

Proposal B= 70,000 + 10*x

70,000 + 10x= 50,000 + 12x

20000= 2x

10000= x

The indifference point is 10,000 units.

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