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:

Type A Behavior

A personality pattern characterized by high levels of competitiveness, impatience, aggressiveness, and a sense of urgency, potentially linked to heart disease risk.

Heart Attacks

A medical emergency where blood flow to the heart is suddenly blocked, causing damage to the heart muscle.

Ruminate

Ruminate involves deeply thinking or overthinking about something, especially problems or negative aspects, sometimes leading to mental health issues like depression.

Atherosclerosis

A disease characterized by the buildup of fats, cholesterol, and other substances in and on the artery walls, leading to restricted blood flow.