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Two alternative methods can produce a product first method has a fixed cost of Rs. 2000/- and variable cost of Rs. 20/- per piece. The second method has a fixed cost of Rs. 1500/- and a variable cost of Rs. 30/-. The break even quantity between the two alternatives is:
- a)25
- b)50
- c)75
- d)100
Correct answer is option 'B'. Can you explain this answer?
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Verified Answer
Two alternative methods can produce a product first method has a fixed...
2000 + 20n = 1500 + 30n, 10n = 500 and n = 50.
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Two alternative methods can produce a product first method has a fixed...
Understanding the Problem:
We are given two alternative methods for producing a product. The first method has a fixed cost of Rs. 2000/- and a variable cost of Rs. 20/- per piece. The second method has a fixed cost of Rs. 1500/- and a variable cost of Rs. 30/- per piece. We need to determine the break-even quantity between the two alternatives.
Break-Even Point:
The break-even point is the quantity at which the total cost of producing the product is equal for both methods. At this point, the total cost incurred by both methods will be the same.
Calculating the Break-Even Quantity:
Let's assume the break-even quantity to be x.
For the first method, the total cost is given by:
Total Cost = Fixed Cost + Variable Cost per piece * Quantity
Total Cost = 2000 + 20x
For the second method, the total cost is given by:
Total Cost = Fixed Cost + Variable Cost per piece * Quantity
Total Cost = 1500 + 30x
Since the break-even point is the quantity at which both methods have the same total cost, we can equate the two equations and solve for x:
2000 + 20x = 1500 + 30x
Simplifying the equation:
10x = 500
x = 500/10
x = 50
Therefore, the break-even quantity between the two alternatives is 50.
Answer:
The correct answer is option B) 50.
We are given two alternative methods for producing a product. The first method has a fixed cost of Rs. 2000/- and a variable cost of Rs. 20/- per piece. The second method has a fixed cost of Rs. 1500/- and a variable cost of Rs. 30/- per piece. We need to determine the break-even quantity between the two alternatives.
Break-Even Point:
The break-even point is the quantity at which the total cost of producing the product is equal for both methods. At this point, the total cost incurred by both methods will be the same.
Calculating the Break-Even Quantity:
Let's assume the break-even quantity to be x.
For the first method, the total cost is given by:
Total Cost = Fixed Cost + Variable Cost per piece * Quantity
Total Cost = 2000 + 20x
For the second method, the total cost is given by:
Total Cost = Fixed Cost + Variable Cost per piece * Quantity
Total Cost = 1500 + 30x
Since the break-even point is the quantity at which both methods have the same total cost, we can equate the two equations and solve for x:
2000 + 20x = 1500 + 30x
Simplifying the equation:
10x = 500
x = 500/10
x = 50
Therefore, the break-even quantity between the two alternatives is 50.
Answer:
The correct answer is option B) 50.
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Two alternative methods can produce a product first method has a fixed cost of Rs. 2000/- and variable cost of Rs. 20/- per piece. The second method has a fixed cost of Rs. 1500/- and a variable cost of Rs. 30/-. The break even quantity between the two alternatives is:a)25 b)50 c)75 d)100Correct answer is option 'B'. Can you explain this answer?
Question Description
Two alternative methods can produce a product first method has a fixed cost of Rs. 2000/- and variable cost of Rs. 20/- per piece. The second method has a fixed cost of Rs. 1500/- and a variable cost of Rs. 30/-. The break even quantity between the two alternatives is:a)25 b)50 c)75 d)100Correct answer is option 'B'. Can you explain this answer? for Mechanical Engineering 2024 is part of Mechanical Engineering preparation. The Question and answers have been prepared according to the Mechanical Engineering exam syllabus. Information about Two alternative methods can produce a product first method has a fixed cost of Rs. 2000/- and variable cost of Rs. 20/- per piece. The second method has a fixed cost of Rs. 1500/- and a variable cost of Rs. 30/-. The break even quantity between the two alternatives is:a)25 b)50 c)75 d)100Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Mechanical Engineering 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Two alternative methods can produce a product first method has a fixed cost of Rs. 2000/- and variable cost of Rs. 20/- per piece. The second method has a fixed cost of Rs. 1500/- and a variable cost of Rs. 30/-. The break even quantity between the two alternatives is:a)25 b)50 c)75 d)100Correct answer is option 'B'. Can you explain this answer?.
Two alternative methods can produce a product first method has a fixed cost of Rs. 2000/- and variable cost of Rs. 20/- per piece. The second method has a fixed cost of Rs. 1500/- and a variable cost of Rs. 30/-. The break even quantity between the two alternatives is:a)25 b)50 c)75 d)100Correct answer is option 'B'. Can you explain this answer? for Mechanical Engineering 2024 is part of Mechanical Engineering preparation. The Question and answers have been prepared according to the Mechanical Engineering exam syllabus. Information about Two alternative methods can produce a product first method has a fixed cost of Rs. 2000/- and variable cost of Rs. 20/- per piece. The second method has a fixed cost of Rs. 1500/- and a variable cost of Rs. 30/-. The break even quantity between the two alternatives is:a)25 b)50 c)75 d)100Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Mechanical Engineering 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Two alternative methods can produce a product first method has a fixed cost of Rs. 2000/- and variable cost of Rs. 20/- per piece. The second method has a fixed cost of Rs. 1500/- and a variable cost of Rs. 30/-. The break even quantity between the two alternatives is:a)25 b)50 c)75 d)100Correct answer is option 'B'. Can you explain this answer?.
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