Question

Machine A has fixed costs of $10,900 and a variable unit cost of $7.95. Machine B has a fixed cost of $8,025 and a variable unit cost of $10.40. The unit sales price is 31, regardless of which machine is used. At what quantity does each machine have an equivalent profit or loss? Round to the nearest one decimal place.

Answer 1

Solution:
Machine A fixed Cost = 10,900
Variable Cost = $7,95
Selling price = 31 per unit
Lets assume that X unit need to sell for equivalent profit or loss
Than 10,900 + 7.95*X = 31*X
23.05*X = 10,900
X = 472.885, after nearest one decimal place 472.9 units

For Machine B
Fixed Cost = 8025
Variable cost = 10.4
Selling price = 31
so units required for equivalant profit and loss
8025 + 10.4*X = 31*X
20.6*X = 8025
X = 389.563, after round off nearest one decimal place 389.6 units