A Fabrication Company Wants to Increase Capacity by Adding a New

question 89

Multiple Choice

A fabrication company 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, $75,000. The variable cost for A is $15.00 per unit and for B, $18.00. The revenue generated by the units processed on these machines is $21 per unit. If the estimated output is 5000 units, which machine should be purchased?

• A) machine A
• B) machine B
• C) either machine A or machine B
• D) no purchase because neither machine yields a profit at that volume
• E) purchase both machines since they are both profitable

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Definitions:

Market Regulations

Rules and directives imposed by governments to control the way markets operate, often intended to promote fair competition, protect consumers, and prevent market failures.

Political Map

A type of map that shows governmental boundaries of countries, states, and counties, important cities, and major bodies of water primarily focused on the political features.

Democratic Strongholds

Regions or areas where the Democratic Party has sustained majority support or dominance, often over extended periods.

Electoral College

The body of electors established by the Constitution of the United States, responsible for electing the president and vice president.