Your company plans to produce a new product,a wireless computer mouse.Two machines can be used to make the mouse,Machines A and B.The price per mouse will be $25.00 regardless of which machine is used.The fixed and variable costs associated with the two machines are shown below.At the expected sales level of 30,000 units,how much higher or lower will the firm's expected EBIT be if it uses Machine B with high fixed costs rather than Machine A with low fixed costs,i.e. ,what is EBIT_B - EBIT_A ? $\begin{array}{lrr} & \text { Machine A } & \text { Machine B } \\\text { Price per mouse (P) } & \$ 25.00 & \$ 25.00 \\\text { Fixed costs (F) } & \$ 100,000 & \$ 400,000 \\\text { Variable costinit (V) } & \$ 17.00 & \$ 11.00 \\\text { Exp. unit sales (Q) } & 30,000 & 30,000\end{array}$
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Question

Your company plans to produce a new product,a wireless computer mouse.Two machines can be used to make the mouse,Machines A and B.The price per mouse will be $25.00 regardless of which machine is used.The fixed and variable costs associated with the two machines are shown below.At the expected sales level of 30,000 units,how much higher or lower will the firm's expected EBIT be if it uses Machine B with high fixed costs rather than Machine A with low fixed costs,i.e. ,what is EBIT_B - EBIT_A ?

\begin{array}{lrr} & \text { Machine A } & \text { Machine B } \\\text { Price per mouse (P) } & \$ 25.00 & \$ 25.00 \\\text { Fixed costs (F) } & \$ 100,000 & \$ 400,000 \\\text { Variable costinit (V) } & \$ 17.00 & \$ 11.00 \\\text { Exp. unit sales (Q) } & 30,000 & 30,000\end{array}

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Quizplus · Accepted Answer

The Answer of Your company plans to produce a new product,a wireless computer mouse.Two machines can be used to make the mouse,Machines A and B.The price per mouse will be $25.00 regardless of which machine is used.The fixed and variable costs associated with the two machines are shown below.At the expected sales level of 30,000 units,how much higher or lower will the firm's expected EBIT be if it uses Machine B with high fixed costs rather than Machine A with low fixed costs,i.e. ,what is EBIT_B - EBIT_A ? $\begin{array}{lrr} & \text { Machine A } & \text { Machine B } \ \text { Price per mouse (P) } & \$ 25.00 & \$ 25.00 \ \text { Fixed costs (F) } & \$ 100,000 & \$ 400,000 \ \text { Variable costinit (V) } & \$ 17.00 & \$ 11.00 \ \text { Exp. unit sales (Q) } & 30,000 & 30,000 \end{array}$ ? A) -$102,000 B) -$129,600 C) -$93,600 D) -$118,800 E) -$120,000

Your Company Plans to Produce a New Product,a Wireless Computer