Process X Has Fixed Costs of $10,000 and Variable Costs

question 42

Multiple Choice

Process X has fixed costs of $10,000 and variable costs of $2.40 per unit. Process Y has fixed costs of $9,000 and variable costs of $2.25 per unit. Which of the following statements is true?

• A) The crossover point is approximately 6667 units.
• B) It is impossible for one process to have both of its costs lower than those of another process.
• C) Process Y is cheaper than process X at all volumes; there is no crossover point.
• D) Process X should be selected for very large production volumes.
• E) Process X is more profitable than process Y and should be selected.

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Definitions:

Ball-and-Socket Joint

A highly mobile joint in which a spherical end of one bone fits into a round socket of another, allowing for movement in multiple directions.

Glenohumeral

Referring to the glenohumeral joint, the ball and socket joint where the arm (humerus bone) connects to the shoulder blade (scapula).

Atlanto-axial

Pertaining to the joint formed between the atlas (first cervical vertebra) and the axis (second cervical vertebra) which enables head rotation.

Acetabular Labrum

A ring of cartilage surrounding the socket of the hip joint that helps to improve the stability of the joint.