Question: A process can be completed using either Alternative X or Y, where Y is an automated version of X. Alternative X has fixed costs of

A process can be completed using either Alternative X or Y, where Y is an automated version of X. Alternative X has fixed costs of $10,000 per year with a variable cost of $50 per unit. If the process is automated, the fixed cost for Y will be

$5,000 per year and its variable cost will be only

$30 per unit. The minimum number of units that must be produced each year for alternative Y to be favored is closest to:

a. Alternative Y will be favored for any level of production

b. 125

c. 375

d. Alternative X will be favored for any level of production

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