A labor-intensive process has a fixed cost of $338,000 and a variable cost of $143 per unit. A capital-intensive (automated) process for the same product has a fixed cost of $1,244,000 and a variable cost of $92.50 per unit. How many units must be produced and sold at $197 each for the automated process to be preferred to the labor-intensive process?
A labor-intensive process has a fixed cost of $338,000 and a variable cost of $143 per unit. A capital-intensive (automated) process for the same product has a fixed cost of $1,244,000 and a variable cost of $92.50 per unit. How many units must be produced and sold at $197 each for the automated process to be preferred to the labor-intensive process?
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter3: Benefits, Costs, And Decisions
Section: Chapter Questions
Problem 8MC
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A labor-intensive process has a fixed cost of $338,000 and a variable cost of $143 per unit. A capital-intensive (automated) process for the same product has a fixed cost of $1,244,000 and a variable cost of $92.50 per unit. How many units must be produced and sold at $197 each for the automated process to be preferred to the labor-intensive process?
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