An Organization Is Considering Three Process Configuration Options

question 18

Essay

An organization is considering three process configuration options. There are two different intermittent processes, as well as a repetitive focus. The smaller intermittent process has fixed costs of $3,000 per month, and variable costs of $10 per unit. The larger intermittent process has fixed costs of $12,000 per month and variable costs of $2 per unit. A repetitive focus plant has fixed costs of $50,000 and variable costs of $1 per unit.
a. If the company produced 20,000 units, what would be its cost under each of the three choices?
b. Which process offers the lowest cost to produce 40,000 units?
What is that cost?

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Definitions:

Technology Dependent

Refers to entities or individuals that heavily rely on technology for operations, functionalities, or daily living.

Improvements

Refers to enhancements or upgrades made to a property or a process that increase its value, efficiency, or usefulness.

Existing Levels

The current state or condition of something, often used to describe the intensity, amount, or degree of an element or entity.

Nonattainment Areas

Geographic areas that have not met the national primary or secondary ambient air quality standards for certain pollutants as designated by the Environmental Protection Agency (EPA).