Pizza Bera Sedap is a pizza making company. Currently, its process makes complete pizzas, fully cooked, for the customer. This process has a fixed cost of RM18,000, and a variable cost of RM1.85 per pizza. The owner is considering a different process that can make pizzas in two ways: completely cooked (as before), or partially cooked and then flash frozen for the customer to finish heating at home. This alternate process has a fixed cost of RM24,000, but a lower variable cost (because much less energy is used in baking) of RM1.05 per pizza. i. Calculate the point of indifference between the alternative processes. ii. Sketch a crossover graph with the x-axis represents the volume, and the y-axis represents the total costs. iii. Point out the economical volume for each process.

Pizza Bera Sedap is a pizza making company. Currently, its process makes complete pizzas, fully cooked, for the customer. This process has a fixed cost of RM18,000, and a variable cost of RM1.85 per pizza. The owner is considering a different process that can make pizzas in two ways: completely cooked (as before), or partially cooked and then flash frozen for the customer to finish heating at home. This alternate process has a fixed cost of RM24,000, but a lower variable cost (because much less energy is used in baking) of RM1.05 per pizza. i. Calculate the point of indifference between the alternative processes. ii. Sketch a crossover graph with the x-axis represents the volume, and the y-axis represents the total costs. iii. Point out the economical volume for each process.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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