Process a Has Fixed Costs of $1000 and Variable Costs

question 83

Multiple Choice

Process A has fixed costs of $1000 and variable costs of $5 per unit. Process B has fixed costs of $500 and variable costs of $15 per unit. The crossover point between process A and process B is

• A) 50 units
• B) 200 units
• C) $2,500
• D) $5,000
• E) $9,500

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Definitions:

Profit Centre

A profit centre is a distinct business unit or department within an organization that is responsible for generating its own revenue and managing its own costs to drive profitability.

Credit Sales

Sales made by a business where the amount is owed by the buyer for a period of time before payment is required.

Invoice Cost

The price for goods or services stated on an invoice, incorporating the cost of production or acquisition, but excluding additional expenses like shipping or taxes.

Cost Of Goods Sold

The direct costs attributable to the production of goods sold by a company, including materials and labor, used to determine gross profit.