Answer to Question #90967 in Mechanical Engineering for Kibrom mulugeta

Question

Two companies A & B, manufacture the same commodity. Company A uses a mechanized process, and company B relies mainly on manual labor. The fixed cost is $ 40,000 per month for A and $ 15,000 per month for B. The directly varying cost is $ 14 per unit for A and $ 52 per unit for B. The selling price is $ 85 per unit for each company. a) At what volume of production are the unit costs of the two companies identical? b) How many units must each company sell each month merely to avoid a loss”

Answer 1

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