Stapleton Manufacturing intends to increase capacity through the addition of new equipment. Two vendors have presented proposals. The fixed cost for proposal A is $57 comma 000, and for proposal B, $31 comma 000. The variable cost for A is $12, and for B, $16. The revenue generated by each unit is $18. a) What is the crossover point for the two options? The crossover point for the two options is nothing units. (Round your response to the nearest whole number.) b) At an expected volume of 4 comma 600 units, which alternative should be chosen? The profit (loss) if proposal A is accepted and 4 comma 600 units are produced is $ nothing. (Round your response to the nearest dollar and include a minus sign if necessary.) The profit (loss) if proposal B is accepted and 4 comma 600 units are produced is $ nothing. (Round your response to the nearest dollar and include a minus sign if necessary.) ▼ Proposal A Proposal B should be chosen at an expected volume of 4 comma 600 units.

Instructions are below.

Explanation:

Giving the following information:

Proposal A:

Fixed costs= $57,000

Variable cost per unit= $12

Proposal B:

Fixed costs= $31,000

Variable cost per unit= $16

A) First, we need to determine the cost formula for each proposal:

Proposal A= 57,000 + 12*x

Proposal B= 31,000 + 16*x

Now, to calculate the indifference point we need to equal both formulas and isolate X (number of units).

57,000 + 12x = 31,000 + 16x

26,000 = 4x

6,500= x

The indifference is 6,500 units. We can corroborate.

Proposal A= 57,000 + 12*6,500= $135,000

Proposal B= 31,000 + 16*6,500= $135,000

B) We need to determine the cheapest option at 4,600 units.

Proposal A= 57,000 + 12*4,600= $112,200

Proposal B= 31,000 + 16*4,600= $104,600

At this level of units, the best option is Proposal B.

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