Process A has fixed costs of $1000 and variable costs of $5 per unit. Process B has fixed costs of $500 and variable costs of $7.50 per unit. What is the crossover point between process A and process B?
A) 50 units
B) 200 units
C) 250 units
D) $5,000
E) $9,500

Question

Quizplus · Accepted Answer

The crossover point is where the total costs of both processes are equal. For Process A, the total cost is $1000 + $5x, and for Process B, it's $500 + $7.50x, where x is the number of units. Setting these equal to each other: $1000 + $5x = $500 + $7.50x. Solving for x gives x = 200 units.

Process a Has Fixed Costs of $1000 and Variable Costs