The two processes have the same total costs

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Reference no: EM132107021

1. The ABC company wants to choose between two new processes, A and B. The fixed cost for process A is $20,000 and for process B, $30,000. The variable cost for A is $6.00 per unit and for B, $4.00 per unit. The two processes have the same total costs at the following:

a. 5000 units, with A preferred at volume lower than 5000.

b. 5000 dollars, with A preferred at volume lower than 5000.

c. 5000 units, with B preferred at volume lower than 5000.

d. 5000 dollars, with B preferred at volume lower than 5000.

e. none of the above

2. A firm is considering two process alternatives, A and B. Alternative A would have the annual fixed cost of $100,000 and variable cost of $22 per unit. Alternative B would have the annual fixed cost of $120,000 and variable cost of $20 per unit. At what volume process A is preferred?

a. From 0 up to 2500 units.

b. From 2500 to 4000 units.

c. From 0 up to 10000 units.

d. From 10000 units and up.

e. From 4000 units and up.

3. The ABC company wants to choose between two new processes, A and B. The fixed cost for process A is $30,000 and for process B, $10,000. The variable cost for A is $9.00 per unit and for B, $14.00 per unit. The two processes have the same total costs at the following:

a. 4000 units, with A preferred at volume lower than 4000.

b. 4000 dollars, with A preferred at volume lower than 4000.

c. 4000 units, with B preferred at volume lower than 4000.

d. 4000 dollars, with B preferred at volume lower than 4000.

e. all of the above.

Reference no: EM132107021

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