{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

BE ICE #3 (with ans) - the first process(√ the second...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
NAME ___________________________________________ SECTION: _____________ RELATIONSHIP: PROCESS COSTS & PRODUCT VOLUMES Two manufacturing processes are being considered for making a new product. The first process is less capital intensive, with fixed costs of $50,000 per year and variable costs of $700 per unit. The second process has fixed costs of $400,000 annually, with variable costs of $200 per unit. a. What is the break even quantity for the two processes? [700 units / year] b. If lowest overall costs per year is your overall objective, for what range of annual production quantities should you select: the first process? ________________________ [0 – 700 units / year] the second process? _______________________ [700+ units / year] c. If annual sales are expected to be 600 units, which process should be selected?
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ____ the first process (√) ____ the second process Operations and Engineering have found a way to reduce the cost of the second process, such that the fixed costs for this process decrease from $400,000 to $300,000 annually. All other costs remain the same (1 st process fixed = $50,000 / year, 1 st process variable = $700 / unit, 2 nd process variable = $200 / unit). d. What is the new break even quantity between the two processes? [500 units / year] e. Does this change the process selection for the new sales volume of 600 units / year? ____ [yes] If so, which process should be selected? ____ the first process [0 – 500] ____ the second process [500+] (√)...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern