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defon
3 years ago
6

Process A has fixed costs of $1000 and variable costs of $5 per unit. Process B has fixed costs of $500 and variable costs of $1

5 per unit. What is the crossover point between process A and process
B?

a. 50 units
b. 200 units
c. $2,500
d. $5,000
e. $9,500
Business
1 answer:
nadezda [96]3 years ago
3 0

Answer:

a. 50 units

Explanation:

The Crossover Analysis is totally inevitable when we need to identify the point whether we can switch one product to another that do have similarity in benefit, while they have different variable and fixed costs.

Then we should find the point for Crossover Units. Crossover Unit=(Fixed Cost 1 –Fixed Cost 2)/(Variable Cost 2-Variable Cost 2)

We have:

Process A with Fixed Cost=1000 and Variable Cost=5 for unit

Process B with Fixed Cost=500 and Variable Cost=15 for unit

Crossover point of unit=(Fixed Cost 1 –Fixed Cost 2)/(Variable Cost 2-Variable Cost 2)= (1000-500)/(15-5)=50 units.

This means that at 50 units, the total cost of each of the two projects is equal.  If you expect to sell more than 50 units then Project A would be the best choice.  If you expect to sell less than 50 units then Project B would be the best choice.

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Rough Hewn Lumber Company orally contracts with Joe for the purchase of five acres of Joe's timberland. Joe makes the transfer b
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7 0
3 years ago
If a company rents a warehouse, it must pay rent for the warehouse whether it is full of inventory or completely vacant. Other e
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As the output is increased or decreased, these (B) fixed costs remain unchanged.

<h3>What are fixed costs?</h3>
  • Fixed costs, also known as indirect costs or overhead costs in accounting and economics, are corporate expenses that are independent of the volume of goods or services generated by the business.
  • They are usually recurrent, such as monthly interest or rent.
  • These expenses are frequently capital expenses.
<h3>Explanation -</h3>
  1. Dependent refers to a variable that changes when other factors change.
  2. Fixed cost refers to a cost that doesn't change when the number of goods produced increases or decreases.
  3. Opportunity cost refers to the benefit that you would have received from the option that was not chosen.
  4. Marginal cost refers to the change in the cost when you produce an additional unit.
  5. According to this definition and as the statement refers to a cost that doesn't change.

Therefore, as the output is increased or decreased, these (B) fixed costs remain unchanged.

Know more about fixed costs here:

brainly.com/question/3636923

#SPJ4

Complete question:

If a company rents a warehouse, it must pay rent for the warehouse whether it is full of inventory or completely vacant. Other examples include executives' salaries, interest expenses, depreciation, and insurance expenses. As the output is increased or decreased, these _______ costs remain unchanged.

a. dependent

b. fixed

c. opportunity

d. marginal

5 0
2 years ago
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