Answer:
The indifference point is 106,457 units.
Explanation:
Giving the following information:
Process A:
Fixed cost= $1,430,000
Variable cost= $14.32 per metal panel.
Process B:
Fixed cost= $820,000
Variable cost= $20.05 per metal panel.
<u>To calculate the indifference point between two processes, first, we need to formulate the total cost equation for each process:</u>
<u></u>
Process A:
Total cost= 1,430,000 + 14.32*x
Process B:
Total cost= 820,000 + 20.05*x
x= number of units
<u>Now, we need to equal both formulas and isolate x:</u>
<u></u>
1,430,000 + 14.32x = 820,000 + 20.05x
610,000 = 5.73x
x= 106,457
The indifference point is 106,457 units.
