Three Production Processes - A,B,and C - Have the Following

Essay

Three production processes - A,B,and C - have the following cost structure: $$\begin{array} { c c c } \hline\hline\text { Process } & \begin{array} { c } \text { Fixed Cost } \\\text { per Year }\end{array} & \begin{array} { c } \text { Variable Cost } \\\text { per Unit }\end{array} \\\hline \text { A } & \$ 120,000 & \$ 3.00 \\\text { B } & 90,000 & 4.00 \\\text { C } & 80,000 & 4.50 \\\hline \hline\end{array}$$
a. What is the most economical process for a volume of 8,000 units?
b. How many units per year must be sold with each process to have annual profits of $50,000 if the selling price is $6.95 per unit?
c. What is the break-even volume for each process?