Question: Corvetto Santo A 1) Two production processes A and B have the following cost structure as shown in the diagram below: (15 min) Process Fixed

Corvetto Santo A 1) Two production processes "A

Corvetto Santo A 1) Two production processes "A and B" have the following cost structure as shown in the diagram below: (15 min) Process Fixed Cost per Year $120,000 90,000 Variable Cost per Unit $3.00 4.00 List of formulas: Profit Revenue - Total cost Revenue Selling price volume Total cost - Fixed cor.cost per item volume A B Break even volume - (Fixed cost/(Unit contribution margin) a. Calculate the break even number of products associated with each process assuming the selling price of $10. (4 marks) b. Calculate the minimum number of products which must be produced (min volume) to make process "A" more economic than process "B". (4 marks) c. Calculate the expected profit/loss for the volume of 9000 units if selling price is $10. (4 marks)

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