A Company Is Evaluating Which of Two Alternatives Should Be

question 37

Multiple Choice

A company is evaluating which of two alternatives should be used to produce a product that will sell for $35 per unit.The following cost information describes the two alternatives If total demand (volume) is 120,000 units,then the company should

• A)select Process A with a profit of $940,000 to maximize profit
• B)select Process B with a profit of $450,000 to maximize profit
• C)select Process A with a profit of $700,000 to maximize profit
• D)select Process B with a profit of $690,000 to maximize profit

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Definitions:

Share Profits

The distribution of a portion of a company's earnings to its shareholders as determined by the board of directors.

Share Losses

In investing, refers to the apportioning of financial losses among shareholders or partners in proportion to their ownership or interest in the enterprise.

Manufacturing Arrangement

A type of franchise in which the franchisor provides the franchisee with a formula or ingredient that is necessary to manufacture a product.

Distributorship

A business arrangement in which a manufacturer or supplier authorizes an entity to distribute its products.