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There are two ways to produce light fixtures, each has a different cost structure: ...

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Accounting

There are two ways to produce light fixtures, each has a different cost structure:

Process A

Process B

Unit Sales Price

$3.00

Unit Sales Price

$3.00

Unit Variable Cost

$1.50

Unit Variable Cost

$1.00

Fixed Cost

$3,000

Fixed Cost

$5,000

What is the break even volume for process B?

If you sold 2220 light fixtures, what would the profit be if you used Process A? What if you use Process B?

Which process would you use if you knew with certainty that you would sell 2000 sharpeners?

If you want to reduce the break even volume for Process B to 2200 and you could change the unit sales price, what would you change it to?

At what quantities will the profits be the same for process A and process B?

Draw and fully label the break even graph for process A.

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