Problem:
A shop wants to increase capacity by adding a new machine. The firm is considering proposals from vendor A and vendor B. The fixed costs for machine A are $90,000 and for machine B, $75,000. The variable cost for A is $15.00 per unit and for B, $18.00. The revenue generated by the units processed on these machines is $22 per unit. If the estimated output is 9,000 units, which machine should be purchased?:
a) purchase both machines since they are both profitable
b) machine A
c) no purchase because neither machine yields a profit at that volume
d) machine B
e) either machine A or machine B
Please select the right answer and provide explanation that shows how you have calculated it.