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

undefined 1) Two production processes A and B undefined

1) Two production processes A and B have the following cost structure as shown in the diagram below: (15 min) Fixed Cost Variable Cost Process List of formulas: Profit = Revenue - Total cost Revenue = Selling price * volume Total cost = Fixed cost + cost per item * volume per Year per Unit A B $120,000 90,000 $3.00 4.00 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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