A Company Is Considering Two Alternative Technologies for Manufacturing a Product

question 26

Essay

A company is considering two alternative technologies for manufacturing a product. The cost data are shown below.
$\begin{array}{lcc} & \text { A } & \text { B } \\\text { Fixed Cost } & \$ 10,000 & \$ 25,000 \\\text { Variable Cost } & \$ 30 / \text { unit } & \$ 5 / \text { unit }\end{array}$ What is the breakeven volume, and under what circumstances should A be chosen?

---

Definitions:

Spaghetti Consumption

The quantity of spaghetti consumed over a given period, often used as an indicator in dietary or food economic studies.

Utility Function

A mathematical representation of how different goods or bundles of goods provide satisfaction to a consumer.

Spaghetti Consumption

The amount of spaghetti eaten, often measured in terms of quantity over a specific time period.

Juliet

A reference to a major character from William Shakespeare's play "Romeo and Juliet," often symbolizing young love or tragic romance.