A Company Is Looking into Two Alternative Methods of Producing

question 139

Essay

A company is looking into two alternative methods of producing its product.The following information about the two alternatives is available:
$\begin{array}{lcc}& \underline {\text { Alternative \#1 } }& \underline {\text { Alternative \#2 } } \\\text { Variable costs per unit } & \$ 8 & \$ 12 \\\text { Fixed costs } & \$ 240,000 & \$ 140,000 \\\text { Sellingprice per unit } & \$ 20 & \$ 20\end{array}$ If the company's expected sales volume is 35,000 units, which alternative should be selected?

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Definitions:

NYSE Hybrid Market

A trading platform that combines electronic trading and traditional floor trading methods to increase efficiency and flexibility in trades.

Immediate Electronic Execution

A system or process that allows financial transactions to be conducted and completed instantaneously via electronic platforms.

Price Improvement

The potential for a trade to be executed at a better price than what is currently quoted publicly, offering a benefit to the buyer or seller.

Private Equity

Investments in companies whose shares are not publicly traded in a stock market.