Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 9

Wilson Partners manufactures thermocouples for electronics applications. The current system has a fixed cost of $300,000 per year and a variable cost of $10 per unit. Wilson sells the units for $14 each. A newly proposed process will add onboard features that allow the revenue to increase to $16 per unit, but the fixed cost will now be $500,000 per year. The variable cost of the new system will be based on a $48 per hour rate with 0.2 hour required to produce each unit.
Plot the two profit relations and estimate graphically the breakeven quantity between the two alternatives.