Diamond Dynamics is an origination that gives services to young baseball and softball teams. Their organization trains the teams to improve their skills and make them a successful team. It not only focuses on the team but also on the members, itself because they teach them how to work together, be team players, and family. The dilemma here is weather is a good idea to invest in the new manufacturing equipment that will speed up the production time on the assembly line. The thing to think about is that the total cost of the equipment and installation, is a large investment of $850,000 and this does not include any maintenance plan. Many things need to be taking in consideration before making the decision to invest. One of the things that …show more content…
What is the cost volume profit is an administrative method that focuses on the effect of sales volume and product costs on operating profit of businesses. The cost volume profit analyzes the sales volume; the unit sells prices, the variable cost unit, and the total fixed cost. The formula that is used for cost volume analysis is px = vx + fc + profit were p stand for price per unit, v stands for variable cost per unit, x stands for the total number of units produced and sold, and fc stands for the total fixed cost. To understand better of the formula is necessary to understand each of its components. Price unit is defined as the “expenditure incurred in producing one unit of a good or service, computed usually as average cost.” What is unit cost? definition and meaning. (n.d.). Retrieved October 30, 2015. Variable cost is defined as “the costs that vary depending on a company's production volume; they rise as production increases and fall as production decreases.” Variable Cost Definition | Investopedia. (2003, November 20). Retrieved October 30, 2015. Fixed cost is defined as “the expenses that have to be paid by a company, independent of any business activity.” Fixed Cost Definition | Investopedia. (2003, November 20). Retrieved