Break even analysis USE EXCEL
Gallant Carpet Cleaning cannot meet demand with its currentequipment. Gallant Carpet Cleaning is considering two new carpetcleaning machines. Machine A cleans carpets to residentialstandards, while machine B cleans and sanitizes carpets to hospitalstandards. Machine A costs $25,000 and machine B costs $36,000. Thecompany estimates its cost per cleaning (including all chemicals)for machine A will be $10 and machine B will be $8. The revenue percarpet cleaned for A would be $42, while B could bring in $45 percarpet, due to the higher degree of sanitation provided.
Complete the table below for the data as well as equations(using Q) for Total cost (TC), Total Revenue (TR) and Profit(Pr).
# of Carpets cleaned =Q | Machine A | Machine B |
FC | | |
v= Variable cos1/unit | | |
Selling price =R | | |
TC | | |
TR | | |
Profit (Pr) | | |
Break-Even Q | | |
Machine B needs to clean how many more carpets than machine A tobreak even?
How many carpets Q to be cleaned will make you becomeindifferent between choosing Machine A or B? Show your work.
Plot the Profit graphs (on same graph) for each machine type.From your graph, recommend over what range of more carpet cleaningdemand (Q) which machine type will be preferred.
