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Question: A company is considering two different production processes for a new product. Process A has a fixed cost of $100,000 and a variable cost of $5 per unit. Process B has a fixed cost of $50,000 and a variable cost of $10 per unit. What is the break-even point for each process? Explanation: The break-even point is the point at which the total revenue equals the total cost. For process A, the break-even point is: $100,000/($5/unit)=20,000units For process B, the break-even point is: $50,000/($10/unit)=5,000units Therefore, process A has a lower break-even point than process B. This means that process A will become profitable sooner than process B. This question is difficult because it requires the student to be able to calculate break-even points for different production processes. It also requires the student to understand the relationship between fixed costs, variable costs, and unit sales