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

question 9

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.
• 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:

Operant Learning Theory

A theory of learning that emphasizes the role of reinforcement and punishment in shaping behavior through a process known as operant conditioning.

Performance Feedback

The process of providing employees with information and assessments regarding their job performance, often with the aim of encouraging improvement.

Verbally

Pertaining to words or the use of words in communication; often implying oral or spoken communication though it can include written words.

Written Form

The representation of language in a textual format through the use of characters or symbols.