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.

Question

Lillianna Holder

Business

4 September, 03:39

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.

+4

Answers (1)

Know the Answer?

Lucas · Answer 1

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