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What is the cross-over point

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Reference no: EM131941416

Suppose a company has two processes to choose from. Process A will incur a total fixed cost of $1 million a year and a per-unit variable cost of $4. Process B will incur a total fixed cost of $1.5 million a year and a per-unit variable cost of $3. 

(a) What is the cross-over point?

(b) What is the volume range over which Process A will incur a lower total cost? And why?

Reference no: EM131941416

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