Respuesta :
Answer:
Supplier= From 1 to 799 units
Process A= 801 to 1,999 units
Process B= 2,001 to infinity
Explanation:
Giving the following information:
Process A:
Fixed costs= $8,000
Variable cost= $10
Process B:
Fixed costs= $20,000
Varaible cost= $4
Supplier:
Buying price= $20
First, we need to determine the cost formula for each process:
Process A= 8,000 + 10x
Process B= 20,000 + 4x
To determine the indifference point, we need to determine the value of X for each process:
Process A= Process B
8,000 + 10x= 20,000 + 4x
6x= 12,000
x= 2,000 units
To prove it:
Process A= 8,000 + 10*2,000= $28,000
Process B= 20,000 + 4*2,000= $28,000
From 2,001 units and up, Process B is cheaper than Process A, because the unitary variable cost is lower.
Now, we have to determine the level of demand for Process A and the supplier.
Supplier= 20x
Process A= Supplier
8,000 + 10x= 20x
8,000= 10x
800= x
To prove:
Process A= 8,000 + 10*800= $16,000
Supplier= 20*800= $16,000
From 801 units to 1,999 Process A is cheaper than the Supplier and Process B.
The level of demand for which the process would have opted as follows:
D). For 1 to 799 Supplier, For 801 to 1,999 units of Process A, For 2001 to infinity Process B.
Level of Demand
Given that,
For Process A
Fixed Cost = $8,000
Variable Cost = $10
Price at which the supplier purchases = $20
Cost for Process A,
∵ Process A = 8,000 + 10x
Similarly for Process B,
Process B
Fixed Cost = $20,000
Variable Cost = $4
Price at which the supplier purchases = $20
Cost for Process B,
∵ Process B = 20,000 + 4x
Since,
A = B
8,000 + 10x= 20,000 + 4x
6x = 12,000
∵ x = 2,000 units
So, by applying the values, we get
[tex]x = 800[/tex]
Process A = B = $28000
Therefore, For 1 to 799 Supplier, For 801 to 1,999 units of Process A, For 2001 to infinity Process B.
Thus, option D is the correct answer.
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