A Firm Must Make a Choice Between a Manual and a Semi-Automatic

Essay

A firm must make a choice between a manual and a semi-automatic production process for a new product line. Following are the costs for each process:
$\begin{array}{|l|c|c|}\hline \text { Alternative } & \text { Fixed Cost } & \text { Variable Cost } \\\hline \text { Manual } & \$ 200,000 & \$ 85.00 \\\hline \text { Semi-Automatic } & \$ 500,000 & \$ 55.00 \\\hline\end{array}$
a.Above what breakeven production quantity would the semi-automatic alternative be preferred?
b.Which process is more economical for an annual production volume of 5,000 units?
c.Which process is more economical for an annual production volume of 9,000 units?