A Firm Must Make a Choice Between a Manual and a Semi-Automatic

question 21

Essay

A firm must make a choice between a manual and a semi-automatic production process for a new product line. Following are the costs for each process:
$$\begin{array} { l c c } \text { Alternatve } & \text { Fixed Cost } & \text { Variable Cost } \\\text { Manual }& \$ 100,000 & \$ 75.00 \\\text { Semi-Automatic } & \$ 300,000 & \$ 50.00\end{array}$$
a. Above what break-even production quantity would the semi-automatic alternative be preferred?
b. Which process is more economical for an annual production volume of 5,000 units?
c. Which process is more economical for an annual production volume of 10,000 units?

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Definitions:

Functional Benefits

The practical or utilitarian advantages that a product or service offers to customers, typically related to its use or functionality.

Personality Approach

A method that emphasizes understanding individuals through their traits and behaviors.

Experiential Approach

A method focusing on creating experiences for consumers, emphasizing the importance of sensory, emotional, cognitive, and relational values beyond the functional value of a product or service.