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Two machines of the same production rate are available for use. On machine 1, the fixed cost is Rs. 100 and the variable cost is Rs. 2 per piece produced. The corresponding numbers for the machine 2 are Rs. 200 and Re. 1 respectively. For certain strategic reasons both the machines are to be used concurrently. The sale price of the first 300 units is Rs. 3.50 per unit and subsequently it is only Rs. 3.00. The breakeven production rate for each machine is:
- a)75
- b)100
- c)150
- d)600
Correct answer is option 'A'. Can you explain this answer?
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Break Even Analysis:
Break-even analysis is a financial tool used to determine the production level at which total revenue equals total costs. In other words, it is the point at which a company neither makes a profit nor incurs a loss.
To calculate the break-even production rate for each machine, we need to consider the fixed costs, variable costs, and the selling price of the units.
Machine 1:
- Fixed cost = Rs. 100
- Variable cost = Rs. 2 per unit
- Selling price = Rs. 3.50 for the first 300 units, and Rs. 3.00 thereafter
Machine 2:
- Fixed cost = Rs. 200
- Variable cost = Re. 1 per unit
- Selling price = Rs. 3.50 for the first 300 units, and Rs. 3.00 thereafter
Break-even calculation:
Let's assume the break-even production rate for each machine is 'x'.
For Machine 1:
Total cost = Fixed cost + Variable cost
= Rs. 100 + (Rs. 2 * x)
For Machine 2:
Total cost = Fixed cost + Variable cost
= Rs. 200 + (Re. 1 * x)
To calculate the break-even production rate, we need to find the point at which the total revenue equals the total cost.
For the first 300 units:
Total revenue = Selling price * Number of units
= Rs. 3.50 * 300
After the first 300 units:
Total revenue = Selling price * Number of units
= Rs. 3.00 * (x - 300)
Equating the total revenue with the total cost, we get:
For Machine 1:
Rs. 3.50 * 300 + Rs. 3.00 * (x - 300) = Rs. 100 + (Rs. 2 * x)
For Machine 2:
Rs. 3.50 * 300 + Rs. 3.00 * (x - 300) = Rs. 200 + (Re. 1 * x)
Simplifying the equations, we get:
For Machine 1:
1050 + 3.00x - 900 = 100 + 2x
2.00x = 950
x = 475
For Machine 2:
1050 + 3.00x - 900 = 200 + x
2.00x = 350
x = 175
Therefore, the break-even production rate for each machine is 475 units for Machine 1 and 175 units for Machine 2.
Since the question asks for the breakeven production rate for each machine, the correct answer is option 'A' (75). However, the calculation provided above yields different values for the break-even production rate. Therefore, the correct answer may be different from the one provided.
Break-even analysis is a financial tool used to determine the production level at which total revenue equals total costs. In other words, it is the point at which a company neither makes a profit nor incurs a loss.
To calculate the break-even production rate for each machine, we need to consider the fixed costs, variable costs, and the selling price of the units.
Machine 1:
- Fixed cost = Rs. 100
- Variable cost = Rs. 2 per unit
- Selling price = Rs. 3.50 for the first 300 units, and Rs. 3.00 thereafter
Machine 2:
- Fixed cost = Rs. 200
- Variable cost = Re. 1 per unit
- Selling price = Rs. 3.50 for the first 300 units, and Rs. 3.00 thereafter
Break-even calculation:
Let's assume the break-even production rate for each machine is 'x'.
For Machine 1:
Total cost = Fixed cost + Variable cost
= Rs. 100 + (Rs. 2 * x)
For Machine 2:
Total cost = Fixed cost + Variable cost
= Rs. 200 + (Re. 1 * x)
To calculate the break-even production rate, we need to find the point at which the total revenue equals the total cost.
For the first 300 units:
Total revenue = Selling price * Number of units
= Rs. 3.50 * 300
After the first 300 units:
Total revenue = Selling price * Number of units
= Rs. 3.00 * (x - 300)
Equating the total revenue with the total cost, we get:
For Machine 1:
Rs. 3.50 * 300 + Rs. 3.00 * (x - 300) = Rs. 100 + (Rs. 2 * x)
For Machine 2:
Rs. 3.50 * 300 + Rs. 3.00 * (x - 300) = Rs. 200 + (Re. 1 * x)
Simplifying the equations, we get:
For Machine 1:
1050 + 3.00x - 900 = 100 + 2x
2.00x = 950
x = 475
For Machine 2:
1050 + 3.00x - 900 = 200 + x
2.00x = 350
x = 175
Therefore, the break-even production rate for each machine is 475 units for Machine 1 and 175 units for Machine 2.
Since the question asks for the breakeven production rate for each machine, the correct answer is option 'A' (75). However, the calculation provided above yields different values for the break-even production rate. Therefore, the correct answer may be different from the one provided.
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Two machines of the same production rate are available for use. On machine 1, the fixed cost is Rs. 100 and the variable cost is Rs. 2 per piece produced. The corresponding numbers for the machine 2 are Rs. 200 and Re. 1 respectively. For certain strategic reasons both the machines are to be used concurrently. The sale price of the first 300 units is Rs. 3.50 per unit and subsequently it is only Rs. 3.00. The breakeven production rate for each machine is:a)75b)100c)150d)600Correct answer is option 'A'. Can you explain this answer?
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Two machines of the same production rate are available for use. On machine 1, the fixed cost is Rs. 100 and the variable cost is Rs. 2 per piece produced. The corresponding numbers for the machine 2 are Rs. 200 and Re. 1 respectively. For certain strategic reasons both the machines are to be used concurrently. The sale price of the first 300 units is Rs. 3.50 per unit and subsequently it is only Rs. 3.00. The breakeven production rate for each machine is:a)75b)100c)150d)600Correct answer is option 'A'. Can you explain this answer? for Mechanical Engineering 2024 is part of Mechanical Engineering preparation. The Question and answers have been prepared according to the Mechanical Engineering exam syllabus. Information about Two machines of the same production rate are available for use. On machine 1, the fixed cost is Rs. 100 and the variable cost is Rs. 2 per piece produced. The corresponding numbers for the machine 2 are Rs. 200 and Re. 1 respectively. For certain strategic reasons both the machines are to be used concurrently. The sale price of the first 300 units is Rs. 3.50 per unit and subsequently it is only Rs. 3.00. The breakeven production rate for each machine is:a)75b)100c)150d)600Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for Mechanical Engineering 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Two machines of the same production rate are available for use. On machine 1, the fixed cost is Rs. 100 and the variable cost is Rs. 2 per piece produced. The corresponding numbers for the machine 2 are Rs. 200 and Re. 1 respectively. For certain strategic reasons both the machines are to be used concurrently. The sale price of the first 300 units is Rs. 3.50 per unit and subsequently it is only Rs. 3.00. The breakeven production rate for each machine is:a)75b)100c)150d)600Correct answer is option 'A'. Can you explain this answer?.
Two machines of the same production rate are available for use. On machine 1, the fixed cost is Rs. 100 and the variable cost is Rs. 2 per piece produced. The corresponding numbers for the machine 2 are Rs. 200 and Re. 1 respectively. For certain strategic reasons both the machines are to be used concurrently. The sale price of the first 300 units is Rs. 3.50 per unit and subsequently it is only Rs. 3.00. The breakeven production rate for each machine is:a)75b)100c)150d)600Correct answer is option 'A'. Can you explain this answer? for Mechanical Engineering 2024 is part of Mechanical Engineering preparation. The Question and answers have been prepared according to the Mechanical Engineering exam syllabus. Information about Two machines of the same production rate are available for use. On machine 1, the fixed cost is Rs. 100 and the variable cost is Rs. 2 per piece produced. The corresponding numbers for the machine 2 are Rs. 200 and Re. 1 respectively. For certain strategic reasons both the machines are to be used concurrently. The sale price of the first 300 units is Rs. 3.50 per unit and subsequently it is only Rs. 3.00. The breakeven production rate for each machine is:a)75b)100c)150d)600Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for Mechanical Engineering 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Two machines of the same production rate are available for use. On machine 1, the fixed cost is Rs. 100 and the variable cost is Rs. 2 per piece produced. The corresponding numbers for the machine 2 are Rs. 200 and Re. 1 respectively. For certain strategic reasons both the machines are to be used concurrently. The sale price of the first 300 units is Rs. 3.50 per unit and subsequently it is only Rs. 3.00. The breakeven production rate for each machine is:a)75b)100c)150d)600Correct answer is option 'A'. Can you explain this answer?.
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