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Two different manufacturing processes are being considered for making a new product. The first process is less capital-intensive, with fixed costs of only $48,800 per year an variable costs of $730 per unit. The second process has fixed costs of $407,000 but variable costs of only $195 per unit. a. What is the break-even quantity, beyond which the second process becomes more attractive than the first? The volume at which the second process becomes more attractive is units. (Enter your response rounded to the nearest whole number.) b. If the expected annual sales for the product is 820 units, which process would you choose? O A. Since the production volume at which the second manufacturing process becomes more attractive is lower than the expected annual sales for the product, you should choose the second manufacturing process. O B. Since the production volume at which the second manufacturing process becomes more attractive is higher than the expected annual sales for the product, you should choose the second manufacturing process. O C. Since the production volume at which the second manufacturing process becomes more attractive is lower than the expected annual sales for the product, you should choose the first manufacturing process. O D. Since the production volume at which the second manufacturing process becomes more attractive is higher than the expected annual sales for the product, you should choose the first manufacturing process.

Two different manufacturing processes are being considered for making a new product. The first process is less capital-intensive, with fixed costs of only $48,800 per year an variable costs of $730 per unit. The second process has fixed costs of $407,000 but variable costs of only $195 per unit. a. What is the break-even quantity, beyond which the second process becomes more attractive than the first? The volume at which the second process becomes more attractive is units. (Enter your response rounded to the nearest whole number.) b. If the expected annual sales for the product is 820 units, which process would you choose? O A. Since the production volume at which the second manufacturing process becomes more attractive is lower than the expected annual sales for the product, you should choose the second manufacturing process. O B. Since the production volume at which the second manufacturing process becomes more attractive is higher than the expected annual sales for the product, you should choose the second manufacturing process. O C. Since the production volume at which the second manufacturing process becomes more attractive is lower than the expected annual sales for the product, you should choose the first manufacturing process. O D. Since the production volume at which the second manufacturing process becomes more attractive is higher than the expected annual sales for the product, you should choose the first manufacturing process.

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 3TP: As a manager, you have to choose between two options for new production equipment. Machine A will...
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Two different manufacturing processes are being considered for making a new product. The first process is less capital-intensive, with fixed costs of only $48,800 per year and variable costs of $730 per unit. The second process has fixed costs of $407,000 but variable costs of only $195 per unit. a. What is the break-even quantity, beyond which the second process becomes more attractive than the first? The volume at which the second process becomes more attractive is units. (Enter your response rounded to the nearest whole number.) b. If the expected annual sales for the product is 820 units, which process would you choose? O A. Since the production volume at which the second manufacturing process becomes more attractive is lower than the expected annual sales for the product, you should choose the second manufacturing process. O B. Since the production volume at which the second manufacturing process becomes more attractive is higher than the expected annual sales for the product, you should choose the second manufacturing process. O C. Since the production volume at which the second manufacturing process becomes more attractive is lower than the expected annual sales for the product, you should choose the first manufacturing process. O D. Since the production volume at which the second manufacturing process becomes more attractive is higher than the expected annual sales for the product, you should choose the first manufacturing process.
Transcribed Image Text:Two different manufacturing processes are being considered for making a new product. The first process is less capital-intensive, with fixed costs of only $48,800 per year and variable costs of $730 per unit. The second process has fixed costs of $407,000 but variable costs of only $195 per unit. a. What is the break-even quantity, beyond which the second process becomes more attractive than the first? The volume at which the second process becomes more attractive is units. (Enter your response rounded to the nearest whole number.) b. If the expected annual sales for the product is 820 units, which process would you choose? O A. Since the production volume at which the second manufacturing process becomes more attractive is lower than the expected annual sales for the product, you should choose the second manufacturing process. O B. Since the production volume at which the second manufacturing process becomes more attractive is higher than the expected annual sales for the product, you should choose the second manufacturing process. O C. Since the production volume at which the second manufacturing process becomes more attractive is lower than the expected annual sales for the product, you should choose the first manufacturing process. O D. Since the production volume at which the second manufacturing process becomes more attractive is higher than the expected annual sales for the product, you should choose the first manufacturing process.
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