Question

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 $7.50 per unit. What is the crossover point between process A and process B? 50 units 250 units $9,500 $5,000 200 units

Answer 1

Answer:

200 units

Explanation:

The computation of the crossover point between process A and process B is shown below:

Let us assume the cross over point be x

We made a question i.e given below:

Total Cost of A = Total Cost of B

$1,000 + 5x =  $500 +7.50x

$1,000 - $500 = 7.50x - 5x

$500 = 2.5x

So, the x is 200 units

Hence, the cross over point is 200 units by applying the above formula so that the correct units could arrive

Answer 2

200 units are the correct option

When we computation of the crossover point between process A and process B is shown below:

Computation

Let us assume the cross over point be x

Total Cost of A = Total Cost of B

Then $1,000 + 5x = $500 +7.50x

Then $1,000 - $500 = 7.50x - 5x

Now $500 = 2.5x

So, the x is 200 units

Hence, the cross over point is 200 units by applying the above formula so that the correct units could arrive.

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