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Problem 13

Economics

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Problem 13.018: Calculate fixed cost for one alternative in order to maintain a breakeven in total costs of two alternatives Process A has a fixed cost of $190,000 per year and a variable cost of $58 per unit. For Process B, 10 units can be produced in 1 day at a cost of $140. If the company's MARR is 10% per year what will the annual fixed cost have to be for Process B in order for the two alternatives to have the same annual total cost at a production rate of 2750 units per year? The annual fixed cost for process in order for the two alternatives to have the same annual total cost is determined to be $