Homework Questions? Ask a Tutor for Answers ASAP
Take your time. I am working tomorrow and won't be back in touch til tomorrow evening. After I receive your answer I have to write a 1050-1500 word essay on the 4 points that you respond to so I appreciate all the information supporting your answers that you can provide.
I do not understand your solutions:
When you determined the revenue in each solution, you only subtracted the variable cost (copy of your example:
So Additional Net Income generated = 100000*(Selling Price - Variable Cost) - Opportunity cost of not producing 30000 Beta Units
= 100000*(15-8) - 30000*(30-12)
The table on the scenario showing the unit profitability report states:
Unit Profitability Report Alpha model Beta model
Price per unit 20 30
Variable cost per unit 8 12
Fixed overhead 9 10
Profits 3 8
So, how can you show the profits of the 100,000 units above in your solution without subtracting fixed cost and variable costs?
Please clarify so that I understand your solutions.