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

question 7

Multiple Choice

A manufacturing firm is considering three alternatives for automation. They anticipate the annual production volume to be 75,000 units. The costs for each alternative are as shown: $\begin{array}{|l|c|c|c|}\hline &&{\text { Alternative }} \\\hline & 1 & 2 & 3 \\\hline \text { Annual Fixed Costs } & 60,000 & \$ 180,000 & \$ 300,000 \\\hline \text { Variable Cost/Unit } & \$ 0.65 & \$ 0.55 & \$ 0.40 \\\hline\end{array}$ What sales price must be charged for Alternative 1 to break even?

• A) Less than or equal to $2.00
• B) More than $2.00 but less than or equal to $3.00
• C) More than $3.00 but less than or equal to $4.00
• D) More than $4.00 but less than or equal to $5.00

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