Three production processes - A,B,and C - have the following cost structure: $$\begin{array} { c c c }
\hline
\hline
\text { Process } & \begin{array} { c }
\text { Fixed Cost } \
\text { per Year }
\end{array} & \begin{array} { c }
\text { Variable Cost } \
\text { per Unit }
\end{array} \
\hline \text { A } & \$ 120,000 & \$ 3.00 \
\text { B } & 90,000 & 4.00 \
\text { C } & 80,000 & 4.50 \
\hline \hline
\end{array}$$
a. What is the most economical process for a volume of 8,000 units?
b. How many units per year must be sold with each process to have annual profits of $50,000 if the selling price is $6.95 per unit?
c. What is the break-even volume for each process?

Question

Three production processes - A,B,and C - have the following cost structure: $$\begin{array} { c c c } 
\hline
\hline
\text { Process } & \begin{array} { c } 
\text { Fixed Cost } \
\text { per Year }
\end{array} & \begin{array} { c } 
\text { Variable Cost } \
\text { per Unit }
\end{array} \
\hline \text { A } & \$ 120,000 & \$ 3.00 \
\text { B } & 90,000 & 4.00 \
\text { C } & 80,000 & 4.50 \
\hline \hline
\end{array}$$ 
a. What is the most economical process for a volume of 8,000 units?
b. How many units per year must be sold with each process to have annual profits of $50,000 if the selling price is $6.95 per unit?
c. What is the break-even volume for each process?

Quizplus · Accepted Answer

The Answer of Three production processes - A,B,and C - have the following cost structure: $$\begin{array} { c c c } 
\hline
\hline
\text { Process } & \begin{array} { c } 
\text { Fixed Cost } \
\text { per Year }
\end{array} & \begin{array} { c } 
\text { Variable Cost } \
\text { per Unit }
\end{array} \
\hline \text { A } & \$ 120,000 & \$ 3.00 \
\text { B } & 90,000 & 4.00 \
\text { C } & 80,000 & 4.50 \
\hline \hline
\end{array}$$ 
a. What is the most economical process for a volume of 8,000 units?
b. How many units per year must be sold with each process to have annual profits of $50,000 if the selling price is $6.95 per unit?
c. What is the break-even volume for each process?

Three Production Processes - A,B,and C - Have the Following