Three processes have the following costs: Process A has a fixed cost of $2,000 and variable cost of $3.00/unit. Process B's fixed cost is $4,000 and variable cost is $2.60/unit. Process C's fixed cost is $8,000 and variable cost is $2.40/unit.
-Over what output range would Process C be preferred?
A)Between 0 and 4,999 units
B)Between 5,100 and 19,999 units
C)Between 20,001 and more units
D)The three processes have exactly the same total costs for any chosen unit.
E)Do not have enough information to compute

Question

Quizplus · Accepted Answer

Process C becomes more cost-effective at higher output levels due to its lower variable cost, despite its higher fixed cost.

Three Processes Have the Following Costs: Process a Has a Fixed