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.
-If the projected total demand is for 6,000 units, which process should be used?
A)Process A
B)Process B
C)Process C
D)Any of the three processes can be chosen, as the processes have the same total cost for 6,000 units.
E)Do not have enough information to compute

Question

Quizplus · Accepted Answer

Process B has the lowest total cost for 6,000 units: $4,000 + ($2.60 * 6,000) = $19,600. Process A costs $20,000 and Process C costs $22,400.

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