A company is considering two alternatives for automating a certain process. Alternative A will have fixed costs of $42,000 per year and will require 2 laborers at $48 per day each. Together, these laborers can generate 100 units of product. Alternative B will have fixed costs of $56,000 per year, but with this alternative, the 3 laborers will generate 200 units of product. In determining the breakeven number of units Q, the total cost per year for Alternative B is represented as:a. [2(48)/100]Qb. [3(48)/200]Qc. [3(48)/200]Q + 56,000d. [2(48)/100]Q + 42,000
A company is considering two alternatives for automating a certain process. Alternative A will have fixed costs of $42,000 per year and will require 2 laborers at $48 per day each. Together, these laborers can generate 100 units of product. Alternative B will have fixed costs of $56,000 per year, but with this alternative, the 3 laborers will generate 200 units of product. In determining the breakeven number of units Q, the total cost per year for Alternative B is represented as:a. [2(48)/100]Qb. [3(48)/200]Qc. [3(48)/200]Q + 56,000d. [2(48)/100]Q + 42,000
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A company is considering two alternatives for automating a certain process. Alternative A will have fixed costs of $42,000 per year and will require 2 laborers at $48 per day each. Together, these laborers can generate 100 units of product. Alternative B will have fixed costs of $56,000 per year, but with this alternative, the 3 laborers will generate 200 units of product. In determining the breakeven number of units Q, the total cost per year for Alternative B is represented as:
a. [2(48)/100]Q
b. [3(48)/200]Q
c. [3(48)/200]Q + 56,000
d. [2(48)/100]Q + 42,000
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