Question

Manual and automated production line as two different manufacturing methods are being compared. The manual production line produces 11pc/hr and requires three workers at £9/hour. Fixed cost of the manual production line is £5900/year. The automated production line produces 26 pc/hr, has a fixed cost of £54,000/year and variable cost of £6/hour. Both manual and automated production lines ate operating 8 hours per day and 245 days per year. Costs of materials used in both methods can be ignored. a) Determine the annual production quantity at which two methods have the same annual cost (break-even point for two methods)

Answer 1

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