Two manufacturing processes are being considered for making a new product. process #1 is less capital intensive, with fixed cost of $50000 per year and variable cost of $700 per unit. process #2 has a fixed cost of $400000 annually, with variable cost of $200 per unit.
If lowest overall costs per year is your overall objective, for what range of annual production quantitis should you select the first process? the second process?
operation and engineering have found a way to reduce the cost of the second process, such that the fixed costs for this process decrease from $400000 to $300000 annually. all other cots remain thesame. what will be the knew break even quantity between the two process?
does this change the process selection for the annual sales volume of 600 units ? if so, for what range of annual production qualities should you select the first process nd the second process?