Question

Another manager wants to evaluate an internal process that would be used to produce the new product. The fixed and variable costs and capacities for each process are listed below. Utilize this information to answer questions 3-4.

3. What are the low-cost output ranges for each alternative given the cost info and capacity info above? (showALL pertinent math and relevant ranges below (on both the 0-∞ continuum and in table). (5 pts)

   0 ------------------------------------------------------------------------------------------------------------------------------------------∞ Math Area:

Process	Fixed Cost	Variable Cost/Unit	Capacity
A	400,000	10	20,000
B	260,000	30	6,000
C	200,000	50	2,500

Process	Range Answer

Answer: _______________ Explanation: ______________________________________________

4) If demand was expected to range between 5,000 and 13,000 for the next 10 years, which process would you select? Explain in one sentence. (1 pt)

Answer 1

Break-even analysis refers to the technique where the sales volume is identified when the total cost and total revenue is equal. At this point, the company neither makes profit nor loss.