Company Y Is Considering Two Production Technologies,Bronze and Platinum,for Producing

question 63

Multiple Choice

Company Y is considering two production technologies,Bronze and Platinum,for producing its new product.The cost structures of the two technologies are as follows:
$$\begin{array} { | l | r | r | } \hline & \text { Bronze } & \text { Platinum } \\\hline \text { Selling price per unit } & \$ 150 & \$ 150 \\\hline \begin{array} { l } \text { Variable production costs } \\\text { per urit }\end{array} & \$ 120 & \$ 50 \\\hline \text { Total fixed production costs } & \$ 300,000 & \$ 1,210,000 \\\hline\end{array}$$
At what level of sales volume in units (rounded to the nearest whole unit) would Company Y be indifferent in choosing between the Bronze and Platinum technologies?

• A) 10,000 units.
• B) 12,100 units.
• C) 13,000 units.
• D) Cannot be determined without additional information.

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Definitions:

Standard Error

Standard error is a statistical measure that estimates the accuracy with which a sample distribution represents a population by using standard deviation.

Population Standard Deviation

Population Standard Deviation is a measure of the dispersion or spread of all the values in a given population, indicating how much the individual values in the population differ from the population mean.

Sample Size

The number of observations or data points collected in a sample, which impacts the precision of statistical results.

Standard Error

A measure of the accuracy of a sample mean by describing the dispersion of sample means around the population mean.