International Machine Manufacturing Company is preparing to build a new plant by considering three potential processes for it. International Machine Manufacturing Company has identified three process alternatives and developed costs as well. The fixed and variable costs for the three alternative processes are presented below. Process A, B and C are the name of three process alternatives. The cost data are as follows: Process A Process B Process C Annual Contracted Units 350,000 350,000 350,000 Annual fixed cost OMR 100,000 OMR 250,000 OMR 550,000 Variable cost (Per Unit) OMR 16 OMR 12 OMR 10 Calculate the following by using the data given: a. Identify the best process to be followed by the International Machine Manufacturing Company. b. Determine the Economical Volume for each process. c. Determine the best process for each of the following volumes: (i) 100,000 (ii) 275,000 (iii) 325,000
International Machine Manufacturing Company is preparing to build a new plant by considering three potential processes for it. International Machine Manufacturing Company has identified three process alternatives and developed costs as well. The fixed and variable costs for the three alternative processes are presented below. Process A, B and C are the name of three process alternatives. The cost data are as follows: Process A Process B Process C Annual Contracted Units 350,000 350,000 350,000 Annual fixed cost OMR 100,000 OMR 250,000 OMR 550,000 Variable cost (Per Unit) OMR 16 OMR 12 OMR 10 Calculate the following by using the data given: a. Identify the best process to be followed by the International Machine Manufacturing Company. b. Determine the Economical Volume for each process. c. Determine the best process for each of the following volumes: (i) 100,000 (ii) 275,000 (iii) 325,000
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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International Machine Manufacturing Company is preparing to build a new plant by considering three potential processes for it. International Machine Manufacturing Company has identified three process alternatives and developed costs as well. The fixed and variable costs for the three alternative processes are presented below. Process A, B and C are the name of three process alternatives. The cost data are as follows:
Process A
Process B
Process C
Annual Contracted Units
350,000
350,000
350,000
Annual fixed cost
OMR 100,000
OMR 250,000
OMR 550,000
Variable cost (Per Unit)
OMR 16
OMR 12
OMR 10
Calculate the following by using the data given:
a. Identify the best process to be followed by the International Machine Manufacturing Company.
b. Determine the Economical Volume for each process.
c. Determine the best process for each of the following volumes: (i) 100,000 (ii) 275,000 (iii) 325,000
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