A Firm Is Considering Three Capacity Alternatives

question 31

Essay

A firm is considering three capacity alternatives:
A,B,and C.Alternative A would have an annual fixed cost of $100,000 and variable costs of $22 per unit.Alternative B would have annual fixed costs of $120,000 and variable costs of $20 per unit.Alternative C would have fixed costs of $80,000 and variable costs of $30 per unit.Revenue is expected to be $50 per unit.
(i)Which alternative has the lowest break-even quantity?
(ii)Which alternative will produce the highest profits for an annual output of 10,000 units?

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Definitions:

Health-Care Task Force

A group organized to address and propose solutions for health care issues, often comprising experts, stakeholders, and policymakers.

Medicare and Social Security

United States' government programs that provide healthcare to the elderly (Medicare) and a social insurance system offering retirement, disability, and survivors' benefits (Social Security).

Safety Net

Programs or measures designed to provide a minimum level of security, support, or financial assistance to individuals or families, especially in times of unemployment, poverty, or economic hardship.

Sexual Misconduct

Inappropriate behavior of a sexual nature, often involving coercion or abuse of power.