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Business, 29.07.2020 05:01 cococat7773

A company is considering two options for the production of a part needed downstream in the manufacturing process. Particulars are as follows:
Specialized automation: Fixed Costs = $9,000 / month Variable Cost / Unit = $2
General automation: Fixed Costs = $3,000 / month Variable Cost / Unit = $5
1. What is the monthly break-even quantity for choosing between the two automation approaches?
a. 1,000 units
b. 2,000 units
c. 6,000 units
d. 12,000 units
2. For a monthly volume of 3,000 units, which automation approach should be chosen?
a. Specialized automation
b. General automation
c. Either approach is acceptable, because costs are the same for either option at 3,000 units.
d. Can’t be determined with information given.

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