A product is currently made in a process-focused shop, where fixed costs are $9,000 per year and variable costs are $50 per unit. The firm is considering a fundamental shift in process, to repetitive manufacturing. The new process would have fixed costs of $90,000, and variable costs of $5. The cross over is at 1800 units annually. for volumes over 1800, the process focus is cheaper.

The cross over is at 1800 units annually. for volumes over 1800, the process focus is cheaper.

Explanation:

The crossover is at 1800 units annually.

For volumes under 1800, the process focus is cheaper and lesser; for volumes that are over 1800 units, the repetitive manufacturing focus is cheaper and lesser

Fixed cost ÷ variable cost

$90000÷50 =$1800

$9,000÷5=$1800

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