Question: Machines Have Taken On An Important Role In Production. The Cost Of Machines Is Typically Wrapped Up In The Fixed Cost Of Production. A Trade-off, Perhaps, Is That The Larger And More Complex The Machine The Larger The Fixed Cost, But The Lower The Unit Variable Cost. Say A Company Is Considering A New Facility With Varying Degrees Of Machine Sophistication….
Machines have taken on an important role in production. The costof machines is typically wrapped up in the fixed cost ofproduction. A trade-off, perhaps, is that the larger and morecomplex the machine the larger the fixed cost, but the lower theunit variable cost. Say a company is considering a new facilitywith varying degrees of machine sophistication. The product itmakes sells at a price of $5 per unit. The cost structure for 3different machines would be Option f v 1 100,000 2 2 60,000 3 325,000 4 a-what is the breakeven level of output for each option?b-what level of output for each option would yield a profit of$50,000? c-what level of output for each option would yield aprofit of $100,000? d-if you felt pretty good that the breakevenlevel of output could be sold under any option, which option wouldyou choose? Explain your choice.