An operations manager is deciding on the level of automation for a newprocess. The fixed cost for automation includes the equipment purchaseprice, installation, and initial spare parts. The variable costs per unit for eachlevel of automation are primarily labor related. Each unit can be sold for $81.As in many cases, you have the default alternative of doing nothing ($0 fixedcost, $0 variable costs).Hint: For these questions, also consider the "Do Nothing" option as a viable optionwhen making your decision.Alternative FixedCostsAnswer:ACheckBC$100,000$272,000$560,000Variable Costs perUnit$54$31Recommended: graph each alternative with units on the x-axis and $ on the y-axis. Also, include revenue on the chart. Identify the break-even points and pointsof indifference. For help on this, see the video posted in Moodle.$20What is the break-even point for option B?Round your answer to the nearest whole number and do not include units.

Formula to be used : Break even point = Fixed cost / Contribution margin per unit

Answered: An operations manager is deciding on…

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

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