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:

Truth Tables

A table used in logic to determine whether a proposition is true or false for all possible logical variable combinations.

Conjunction

A logical operator that connects two statements or propositions, where the truth of both is required for the entire statement to be true.

Consistent

Describes a system or behavior that does not contain contradictions and adheres to the same principles, standards, or patterns over time.

Contingency

A statement or proposition that is neither necessarily true nor necessarily false, depending on some variables or conditions.