Answer:
A.50,000 units
B.62,500 units
C.Process A with a profit of $700,000 to maximize profit
Step-by-step explanation:
A.Calculation for the breakeven volume for Process A
Using this formula
Breakeven volume for Process A= Fixed cost/(Sales per units-Variable cost per units)
Let plug in the formula
Breakeven volume for Process A=500,000/(35-25)
Breakeven volume for Process A=500,000/10
Breakeven volume for Process A=50,000 units
B.Calculation for the breakeven volume for Process B
Using this formula
Breakeven volume for Process B= Fixed cost/(Sales per units-Variable cost per units)
Let plug in the formula
Breakeven volume for Process B=750,000/(35-23)
Breakeven volume for Process B=750,000/12
Breakeven volume for Process B=62,500 units
C. Calculation for what the company should do if the total demand (volume) is 120,000 units
Using this formula
Profit=(Total demand*(Sales per units-Variable cost per units for Process A)- Process A fixed cost
Let plug in the formula
Profit =120,000*($35-$25)-$500,000
Profit=120,000*10-$500,000
Profit=1,200,000-$500,000
Profit= $700,000
Therefore If total demand (volume) is 120,000 units, then the company should select Process A with a profit of $700,000 to maximize profit.
