Question

A product is currently made in a process-focused shop, where fixed costs are $9,000 per year and variable costs are $50 per unit. The firm is considering a fundamental shift in process, to repetitive manufacturing. The new process would have fixed costs of $90,000, and variable costs of $5. The cross over is at 1800 units annually. for volumes over 1800, the process focus is cheaper.

Answer 1

Answer:

The cross over is at 1800 units annually. for volumes over 1800, the process focus is cheaper.

Explanation:

The crossover is at 1800 units annually.

For volumes under 1800, the process focus is cheaper and lesser; for volumes that are over 1800 units, the repetitive manufacturing focus is cheaper and lesser

Fixed cost ÷ variable cost

$90000÷50 =$1800

$9,000÷5=$1800