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:

Pharynx

The muscular tube that connects the mouth and nasal passages to the esophagus and larynx, serving both respiratory and digestive functions.

Primary Teeth

The first set of teeth in the development of humans and other mammals, also known as baby or milk teeth, which are eventually replaced by permanent teeth.

Lingual Frenulum

A small fold of mucous membrane that attaches the middle of the under surface of the tongue to the floor of the mouth, aiding in tongue movement.

Tongue

A muscular organ in the mouth that aids in chewing, swallowing, and taste sensation.