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

question 67

Essay

A manufacturing firm is considering three alternatives for automation. They anticipate annual production volume to be 75,000 units. The costs for each alternative are as shown:
$\begin{array}{lccc} &&\underline{\text { Alternative }}\\& \underline{1}& \underline{2 }& \underline{ 3}\\\text { Annual Fixed Costs } & 60,000 & \$ 180,000 & \$ 300,000 \\\text { Variahle Cost/Unit } & \$ 065 & \$ 055 & \$ 040\end{array}$
a. What sales price must be charged for Alternative 1 to breakeven?
b. What sales price must be charged for Alternative 2 to breakeven?
c. What sales price must be charged for Alternative 3 to breakeven?

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Definitions:

Clarity

The quality of being coherent and intelligible, or clear in thought or expression.

Bacillus Anthracis

A bacterium that causes anthrax, a serious infectious disease in humans and animals.

Gram-positive

Relating to a group of bacteria that retain the crystal violet stain used during the Gram staining method of bacterial differentiation, appearing purple under a microscope.

Gram-variable

Pertaining to bacteria that do not consistently stain either as Gram-positive or Gram-negative because of their cell wall composition variations.