A Company Is Investigating Two Automated Approaches for Its Production

question 45

Essay

A company is investigating two automated approaches for its production process. It has collected the following cost information about each:
$$\begin{array} { c c c } \text { Alternative } & \text { Fixed Cost } &\text { Variable Cost }\\ \mathrm { CNC } & \$ 80,000 & \$ 2.75 \\ \text { FMS } & \$ 190,000 & \$ 1.25 \\\end{array}$$
a. At what point of production will the firm be indifferent to which process it wants?
b. Which process is more economical for an annual production volume of 50,000 units?
c. Which process is more economical for an annual production volume of 100,000 units?

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Definitions:

MPAA Rating

A classification system used in the United States by the Motion Picture Association of America to provide movie viewers with guidance on the suitability of films based on their content.

PG-13

A film rating by the Motion Picture Association indicating that some material may be inappropriate for children under 13.

Watergate Scandal

A major political scandal in the United States involving the Nixon administration's attempted cover-up of its involvement in the 1972 break-in at the Democratic National Committee headquarters.

Downbeat Ending

Endings in films that leave the audience with a sense of unresolved conflict, sadness, or pessimism, contrary to the traditional happy ending.