Process X Has Fixed Costs of $10,000 and Variable Costs

question 9

Multiple Choice

Process X has fixed costs of $10,000 and variable costs of $2.40 per unit. Process Y has fixed costs of $9,000 and variable costs of $2.25 per unit. Which of the following statements is TRUE?

• A) The crossover point is approximately 6667 units.
• B) It is impossible for one process to have both of its costs lower than those of another process.
• C) Process Y is cheaper than process X at all volumes.
• D) Process X should be selected for very large production volumes.
• E) Process X is more profitable than process Y and should be selected.

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Definitions:

Instinctual

Instinctual refers to behaviors and responses that are innate or inherent to an organism, not learned through experience.

Auditory Communication

refers to the exchange of information through verbal language and sounds that can be heard.

Linguistic Relativity Hypothesis

The concept that the structure of a language influences its speakers' world view or cognition, and thus people's perceptions are relative to their spoken language.

Cognitive Linguistic Hypothesis

A theory suggesting that language influences or shapes the speaker's worldview and cognitive processes.