Question: URGENT!! PLEASE HELP!!! Two different manufacturing processes are being considered for making a new product. The first process is lesscapital-intensive, with fixed costs of only
URGENT!! PLEASE HELP!!! Two different manufacturing processes are being considered for making a new product. The first process is lesscapital-intensive, with fixed costs of only $45,800 per year and variable costs of $745 per unit. The second process has fixed costs of $394,000 but variable costs of only $245 per unit.
a. What is the break-even quantity, beyond which the second process becomes more attractive than the first?
The volume at which the second process becomes more attractive is _______ units. (Enter your response rounded to the nearest whole number.)
b. If the expected annual sales for the product is 800 units, which process would you choose?
1.. Since the production volume at which the second manufacturing process becomes more attractive is higher than the expected annual sales for the product, you should choose the second manufacturing process.
2. Since the production volume at which the second manufacturing process becomes more attractive is lower than the expected annual sales for the product, you should choose the second manufacturing process.
3. Since the production volume at which the second manufacturing process becomes more attractive is lower than the expected annual sales for the product, you should choose the first manufacturing process.
4. Since the production volume at which the second manufacturing process becomes more attractive is higher than the expected annual sales for the product, you should choose the first manufacturing process.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
