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Process I requires 20 units of fixed cost and 3 units of variable cost per piece, while Process II required 50 units of fixed cost and 1 unit of variable cost per piece. For a company producing 10 piece per day 
  • a)
    Process I should be chosen
  • b)
    Process II should be chosen  
  • c)
    Either of the two processes could be chosen  
  • d)
    A combination of process I and process II should be chosen 
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
Process I requires 20 units of fixed cost and 3 units of variable cost...
For 10 pieces, it is economical to use process I. 
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Most Upvoted Answer
Process I requires 20 units of fixed cost and 3 units of variable cost...
Explanation:


To determine which process should be chosen, we need to calculate the total cost for both processes and compare them.

Process I:


- Fixed cost = 20 units


- Variable cost per piece = 3 units


- Total cost for 10 pieces = (20 + (3 * 10)) = 50 units

Process II:


- Fixed cost = 50 units


- Variable cost per piece = 1 unit


- Total cost for 10 pieces = (50 + (1 * 10)) = 60 units

Since the total cost for Process I is lower than the total cost for Process II, Process I should be chosen.

Therefore, the correct answer is option 'A' - Process I should be chosen.
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Community Answer
Process I requires 20 units of fixed cost and 3 units of variable cost...
A
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