Answered

Find the best solutions to your questions at Westonci.ca, the premier Q&A platform with a community of knowledgeable experts. Ask your questions and receive detailed answers from professionals with extensive experience in various fields. Experience the convenience of finding accurate answers to your questions from knowledgeable experts on our platform.

A firm is about to undertake the manufacture of a product, and it is weighing the process configuration options. There are two intermittent processes under consideration, as well as a repetitive focus. The smaller intermittent process has fixed costs of $3,000 per month and variable costs of $10 per unit. The larger intermittent process has fixed costs of $11,000 per month and variable costs of $5 per unit. A repetitive focus plant has fixed costs of $41,000 per month and variable costs of $1 per unit.

Required:
a. At what output does the large intermittent process become cheaper than the small one?
b. At what output does the repetitive process become cheaper than the larger intermittent process?

Sagot :

ayokenny2001

Answer:

See below

Explanation:

Using this formula

Fixed cost of process B - fixed cost of process A ÷ unit variable cost of process A - unit variable cost of process B

a. Fixed cost = $11,000

Fixed cost = $3,000

Unit variable = $10

Unit variable = $5

Hence:

= ($11,000 - $3,000) / ($10 - $5)

= $7,000 / $5

= $1,400

This means that the larger intermittent process becomes cheaper than the small one by $1,400

b. Fixed cost = $41,000

Fixed cost = $11,000

Unit variable = $5

Unit variable = $1

= ($41,000 - $11,000) / ($5 - $1)

= $30,000 / $4

= $7,500

This means that the repetitive process become cheaper than the larger intermittent process by $7,500

Thank you for your visit. We are dedicated to helping you find the information you need, whenever you need it. Thank you for your visit. We're dedicated to helping you find the information you need, whenever you need it. Thank you for visiting Westonci.ca. Stay informed by coming back for more detailed answers.