A firm must make a choice between a manual and a semi-automatic production process for a new product line. Following are the costs for each process:
$\begin{array}{|l|c|c|}
\hline \text { Alternative } & \text { Fixed Cost } & \text { Variable Cost } \
\hline \text { Manual } & \$ 200,000 & \$ 85.00 \
\hline \text { Semi-Automatic } & \$ 500,000 & \$ 55.00 \
\hline
\end{array}$
a.Above what breakeven production quantity would the semi-automatic alternative be preferred?
b.Which process is more economical for an annual production volume of 5,000 units?
c.Which process is more economical for an annual production volume of 9,000 units?

Question

A firm must make a choice between a manual and a semi-automatic production process for a new product line. Following are the costs for each process:
 $\begin{array}{|l|c|c|}
\hline \text { Alternative } & \text { Fixed Cost } & \text { Variable Cost } \
\hline \text { Manual } & \$ 200,000 & \$ 85.00 \
\hline \text { Semi-Automatic } & \$ 500,000 & \$ 55.00 \
\hline
\end{array}$ 
a.Above what breakeven production quantity would the semi-automatic alternative be preferred?
b.Which process is more economical for an annual production volume of 5,000 units?
c.Which process is more economical for an annual production volume of 9,000 units?

Quizplus · Accepted Answer

The Answer of A firm must make a choice between a manual and a semi-automatic production process for a new product line. Following are the costs for each process:
 $\begin{array}{|l|c|c|}
\hline \text { Alternative } & \text { Fixed Cost } & \text { Variable Cost } \
\hline \text { Manual } & \$ 200,000 & \$ 85.00 \
\hline \text { Semi-Automatic } & \$ 500,000 & \$ 55.00 \
\hline
\end{array}$ 
a.Above what breakeven production quantity would the semi-automatic alternative be preferred?
b.Which process is more economical for an annual production volume of 5,000 units?
c.Which process is more economical for an annual production volume of 9,000 units?

A Firm Must Make a Choice Between a Manual and a Semi-Automatic