A company is investigating two automated approaches for its production process. It has collected the following cost information about each:
$$\begin{array} { c c c }
\text { Alternative } & \text { Fixed Cost } &\text { Variable Cost }\

\mathrm { CNC } & \$ 80,000 & \$ 2.75 \
\text { FMS } & \$ 190,000 & \$ 1.25 \

\end{array}$$
a. At what point of production will the firm be indifferent to which process it wants?
b. Which process is more economical for an annual production volume of 50,000 units?
c. Which process is more economical for an annual production volume of 100,000 units?

Question

A company is investigating two automated approaches for its production process. It has collected the following cost information about each:
 $$\begin{array} {  c c c  } 
\text { Alternative } & \text { Fixed Cost } &\text { Variable Cost }\

\mathrm { CNC } & \$ 80,000 & \$ 2.75 \
 \text { FMS } & \$ 190,000 & \$ 1.25 \

\end{array}$$ 
a. At what point of production will the firm be indifferent to which process it wants?
b. Which process is more economical for an annual production volume of 50,000 units?
c. Which process is more economical for an annual production volume of 100,000 units?

Quizplus · Accepted Answer

The Answer of A company is investigating two automated approaches for its production process. It has collected the following cost information about each:
 $$\begin{array} {  c c c  } 
\text { Alternative } & \text { Fixed Cost } &\text { Variable Cost }\

\mathrm { CNC } & \$ 80,000 & \$ 2.75 \
 \text { FMS } & \$ 190,000 & \$ 1.25 \

\end{array}$$ 
a. At what point of production will the firm be indifferent to which process it wants?
b. Which process is more economical for an annual production volume of 50,000 units?
c. Which process is more economical for an annual production volume of 100,000 units?

A Company Is Investigating Two Automated Approaches for Its Production