A Company Is Looking into Two Alternative Methods of Producing

question 74

Essay

A company is looking into two alternative methods of producing its product.The following information about the two alternatives is available:
$\begin{array}{lcc}&\text { Alternative \#1 }&\text { Alternative \#2 }\\ \text { Variable costs per unit } & \$ 8 & \$ 12 \\\text { Fixed costs } & \$ 240,000 & \$ 140,000 \\\text { Selling price per unit } & \$ 20 & \$ 20\end{array}$

If the company's expected sales volume is 35,000 units,which alternative should be selected?

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Definitions:

Amoeboid Cells

Cells that move or feed by forming extensions of their cytoplasm, known as pseudopodia.

Flagellated Collar Cells

Specialized cells found in sponges that have a flagellum surrounded by a collar used to pump water through the sponge and trap food particles.

True Coelom

A fluid-filled body cavity completely lined by tissue derived from the mesoderm, found in most complex animals, which provides a space for organ development and movement.

Sponges

Simple aquatic animals that draw water containing food particles into their porous bodies by means of flagellated cells.