Assume that you and your brother plan to open a business that will make and sell a newly designed type of sandal. Two robotic machines are available to make the sandals, Machine A and Machine B. The price per pair will be $19.50 regardless of which machine is used. The fixed and variable costs associated with the two machines are shown below. What is the difference between the breakeven points for Machines A and B? (Hint: Find BEB – BEA)

Machine A

Price per pair (P) $19.50

Fixed costs (F) $25,000

Variable cost/unit (V) $7.00

Machine B

Price per pair (P) $19.50

Fixed costs (F) $100,000

Variable cost/unit (V) $4.00

Answer

3,784

4,318

3,739

4,674

4,452

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