Two different manufacturing processes are being consideredfor making a new product. The first process is less capitalintensive, with fixed costs of only $50,000 per year andvariable costs of $700 per unit. The second process has fixedcosts of $400,000 but has variable costs of only $200 per unit.a. What is the break-even quantity beyond which the secondprocess becomes more attractive than the first?b. If the expected annual sales for the product is 800 units,which process would you choose?

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.