80,000 4.50 a. What is the most economical process for a volume of 8,000 units? b. How many units per year must be sold with each process to have annual profits of $50,000 if the selling price is 56.95 per unit? c. What is the break-even volume for each process?

80,000 4.50 a. What is the most economical process for a volume of 8,000 units? b. How many units per year must be sold with each process to have annual profits of $50,000 if the selling price is 56.95 per unit? c. What is the break-even volume for each process?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter13: The Balanced Scorecard: Strategic-based Control

Section: Chapter Questions

Problem 8E: Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its...

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Question

Three production processes-A, B, and C-have the following cost structure:
Fixed Cost
Variable Cost
Process
per Year
per Unit
$120,000
$3.00
90,000
4.00
80,000
4.50
a. What is the most economical process for a volume of 8,000 units?
b. How many units per year must be sold with each process to have annual profits of
$50,000 if the selling price is $6.95 per unit?
c. What is the break-even volume for each process?

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