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A component can be produced by any of the four processes I, II, III and IV. The fixed cost and the variable cost for each of the processes are listed below. The most economical process for producing a batch of 100 pieces is
[2014]
  • a)
    I
  • b)
    II
  • c)
    III
  • d)
    IV
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
A component can be produced by any of the four processes I, II, III an...
TC = Fixed Cost + Variable cost
TCI = 20 + 100  × 3 = Rs.320
TCII = 50 + 100 × 1 = Rs.150
TCIII = 40 + 100 × 2 = Rs.240
TCIV = 10 + 100 × 4 = Rs.410 Since total cost for the Process II is minimum So II is cost for economical point of view
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Most Upvoted Answer
A component can be produced by any of the four processes I, II, III an...
TC = Fixed Cost + Variable cost
TCI = 20 + 100  × 3 = Rs.320
TCII = 50 + 100 × 1 = Rs.150
TCIII = 40 + 100 × 2 = Rs.240
TCIV = 10 + 100 × 4 = Rs.410
Since the total cost for Process II is minimum So II is the cost for economical point of view
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A component can be produced by any of the four processes I, II, III and IV. The fixed cost and the variable cost for each of the processes are listed below. The most economical process for producing a batch of 100 pieces is[2014]a)Ib)IIc)IIId)IVCorrect answer is option 'B'. Can you explain this answer?
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