A Company Is Considering Two Alternative Technologies for Manufacturing a Product

question 58

Multiple Choice

A company is considering two alternative technologies for manufacturing a product. The cost data are shown below. $\begin{array}{|l|c|c|}\hline & \text { A } & \text { B } \\\hline \text { Fixed Cost } & \$ 10,000 & \$ 25,000 \\\hline \text { Variable Cost } & \$ 30 / \text { unit } & \$ 5 / \text { unit } \\\hline\end{array}$ The breakeven volume is _____.

• A) less than or equal to 200 units
• B) more than 200 but less than or equal to 300 units
• C) more than 300 but less than or equal to 400 units
• D) more than 400 units

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Definitions:

Firms

Business organizations or entities engaged in commercial, industrial, or professional activities, aiming to generate profits through the provision of goods or services.

Workers

Individuals engaged in any form of economic activity to earn wages or salary.

Market Wage

The prevailing rate of pay for work in a particular field or occupation in the competitive market.

Profit Maximizing

The process of increasing the difference between total revenue and total cost to achieve the highest possible profit.