Fred's Fabrication, Inc

question 24

Multiple Choice

Fred's Fabrication, Inc. wants to increase capacity by adding a new machine. The firm is considering proposals from vendor A and vendor B. The fixed costs for machine A are $90,000 and for machine B, $70,000. The variable cost for A is $9.00 per unit and for B, $14.00. The revenue generated by the units processed on these machines is $20 per unit. The crossover between machine A and machine B is

• A) 4,000 units, with A more profitable at low volumes
• B) 4,000 dollars, with A more profitable at low volumes
• C) 4,000 units, with B more profitable at low volumes
• D) 4,000 dollars, with B more profitable at low volumes
• E) none of the above

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