The break-even graph shown below represents the cost structure associated with a flexible production process and one that is fixed (less flexible)
Using the information displayed in the graph, determine the cost structures associated with the two alternative production methods.
The Fixed alternative has a fixed cost of $17,000.
The Flexible alternative has a fixed cost of $28,000.
Their point of intersection is at an output volume of 55,000 units, which results in a cost of $41,750.
For the Fixed alternative, $41,750 = $17,000 + 55,000 × VC
VC = ($41,750 - $17,000 )/55,000
VC = $0.45
For the Flexible alternative, $41,750 = $28,000 + 55,000 × VC
VC = ($41,750 - $28,000 )/55,000
VC = $0.25
You might also like to view...
Which of the following statements best compares long-term borrowing capacity ratios?
a. The debt/equity ratio is more conservative than the debt ratio. b. The debt ratio is more conservative than the debt/equity ratio. c. The debt/equity ratio is more conservative than the debt to tangible net worth ratio. d. The debt to tangible net worth ratio is more conservative than the debt/equity ratio. e. The debt ratio is more conservative than the debt to tangible net worth ratio.
The field trip is meant to
A. assess the competition's readiness. B. develop a feel for the market and what is going on there. C. close the market screening with a well-deserved reward. D. be an opportunity to meet local potential partners.
If the shares of stock sold or exchanged are not specifically identified, the average cost method of identification must be used.
Answer the following statement true (T) or false (F)
Ask feedback questions about the conversation or problem-solving process itself to determine what is important to the customer. _________________________
Answer the following statement true (T) or false (F)