Discuss the below:
Q: A small firm intends to increase the capacity of a bottleneck operation by adding a new machine. Two alternatives, A and B, have been identified, and the associated costs and revenues have been estimated. Annual fixed costs would be $36,000 for A and $31,000 for B; variable costs per unit would be $7 for A and $11 for B; and revenue per unit would be $17.
a. Determine each alternative's break-even point in units.
b. At what volume of output would the two alternatives yield the same profit?