The Crossover Point Is That Production Quantity Where

question 76

Multiple Choice

The crossover point is that production quantity where:

• A) variable costs of one process equal the variable costs of another process.
• B) fixed costs of a process are equal to its variable costs.
• C) total costs equal total revenues for a process.
• D) total costs for one process equal total costs for another process.
• E) the process no longer loses money.

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Definitions:

Cost Formula

An equation used to calculate the total cost of production, which may include fixed costs, variable costs, or a combination of both.

Machine-Hours

Machine-hours measure the amount of time a piece of machinery is in operation and is often used as a basis for allocating manufacturing overhead.

Maintenance Cost

Expenses incurred in keeping property, equipment, or machinery in efficient operating condition, including both preventive and corrective measures.

Relevant Range

The span of activity levels within which the assumptions made about cost behavior in cost-volume-profit analysis remain valid.