Answer:
Instructions are below.
Explanation:
Giving the following information:
Process A:
Fixed cost= $20,000
Unitary variable cost= $1.75
Process B:
Fixed cost= $24,000
Unitary variable cost= $1.25
A) First, we need to structure the total costs formula:
Process A= 20,000 + 1.75x
Process B= 24,000 + 1.25x
x= number of units
Now, we will equal them to determine the crossover point:
20,000 + 1.75x = 24,000 + 1.25x
0.5x= 4,000
units= 8,000
B) units= 9,000
Process A= 20,000 + 1.75*9,000= $35,750
Process B= 24,000 + 1.25*9,000= $35,250
<u>The company should acquire a new process.</u>