ABC Corporation would like to evaluate three production processes (A,B,and C)to accommodate the changes in demand for its products.The fixed and variable cost per unit are tabled here.Determine the most cost-effective process for an expected annual production volume of 2,000 units. $$\begin{array} { | l | l | l | }
\hline \text { Process } & \begin{array} { l }
\text { Fxed } \
\text { Cost }
\end{array} & \begin{array} { l }
\text { Variable Cost per } \
\text { Unit }
\end{array} \
\hline \mathrm { A } & \$ 30,000 & \$ 40 \
\hline \mathrm { B } & \$ 40,000 & \$ 30 \
\hline \mathrm { C } & \$ 80,000 & \$ 20 \
\hline
\end{array}$$

Question

ABC Corporation would like to evaluate three production processes (A,B,and C)to accommodate the changes in demand for its products.The fixed and variable cost per unit are tabled here.Determine the most cost-effective process for an expected annual production volume of 2,000 units. $$\begin{array} { | l | l | l | } 
\hline \text { Process } & \begin{array} { l } 
\text { Fxed } \
\text { Cost }
\end{array} & \begin{array} { l } 
\text { Variable Cost per } \
\text { Unit }
\end{array} \
\hline \mathrm { A } & \$ 30,000 & \$ 40 \
\hline \mathrm { B } & \$ 40,000 & \$ 30 \
\hline \mathrm { C } & \$ 80,000 & \$ 20 \
\hline
\end{array}$$

Quizplus · Accepted Answer

To determine the most cost-effective process for an expected annual production volume of 2,000 units, we need to calculate the total cost for each process and choose the one with the lowest cost.

For Process A:
Total cost = Fixed cost + (Variable cost per unit x Expected production volume)
Total cost = $30,000 + ($40 x 2,000)
Total cost = $110,000

For Process B:
Total cost = Fixed cost + (Variable cost per unit x Expected production volume)
Total cost = $40,000 + ($30 x 2,000)
Total cost = $100,000

For Process C:
Total cost = Fixed cost + (Variable cost per unit x Expected production volume)
Total cost = $80,000 + ($20 x 2,000)
Total cost = $120,000

Therefore, based on the calculations above, the most cost-effective process for an expected annual production volume of 2,000 units is Process B, with a total cost of $100,000. Therefore, the answer is B.

ABC Corporation Would Like to Evaluate Three Production Processes (A,B,and