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ABC Firm Machine Purchase Analysis

The document discusses three alternatives for purchasing a new machine. It provides the fixed costs, sales price per unit, and variable cost per unit for each alternative. It then asks to analyze the alternatives by building a relation model, calculating the break-even point for each in units and dollars, determining the best and second best alternatives, calculating the quantity needed to make $60,000 profit, and graphing the answers.

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abdulla mohammad
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81 views5 pages

ABC Firm Machine Purchase Analysis

The document discusses three alternatives for purchasing a new machine. It provides the fixed costs, sales price per unit, and variable cost per unit for each alternative. It then asks to analyze the alternatives by building a relation model, calculating the break-even point for each in units and dollars, determining the best and second best alternatives, calculating the quantity needed to make $60,000 profit, and graphing the answers.

Uploaded by

abdulla mohammad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd

ABC Firm decides to purchase new machine.

Depanding on the available in

Alt. 1 Alt.2
:FC $90,000 :FC $85,000
:SP $80 :SP $80
:VC $65 :VC $60

a) Build the Relation Analysis Model among quantity, profit, and cost by using the
.available information
.b- Find the BEP for each alternative in units and in dollar
c- What is the best alternative and the second one
d- Calculate the quantity required to gain $60000 profit
e- By using Chart Wizard graph your answer for each alternative.

Atl1
Sales price per unit 80
Variable cost per unit 65
Fixed cost 90000
Contribution Margin CM 15
BEP units 6000
BEP$ $480,000
Activity level
Fixed cost 90000
Total Variable cost
Total cost
Total revenue
Profit (loss)

ATL3
Sales price per unit 80
Variable cost per unit 55
Fixed cost 70000
Contribution Margin CM 25
BEP units 2800
BEP$ $224,000
Activity level
Fixed cost 70000
Total Variable cost
Total cost
Total revenue
Profit (loss)
g on the available information, answer the following quistions.

Alt.3
:FC $70,000
:SP $80.00
:VC $55.00

st by using the

ALTY2
Sales price per unit 85
Variable cost per unit 80
Fixed cost 60
Contribution Margin CM 5
BEP units 12
BEP$ $1,020
Activity level
Fixed cost 60
Total Variable cost
Total cost
Total revenue
Profit (loss)

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