Answer:
a. 50 units
Explanation:
The Crossover Analysis is totally inevitable when we need to identify the point whether we can switch one product to another that do have similarity in benefit, while they have different variable and fixed costs.
Then we should find the point for Crossover Units. Crossover Unit=(Fixed Cost 1 –Fixed Cost 2)/(Variable Cost 2-Variable Cost 2)
We have:
Process A with Fixed Cost=1000 and Variable Cost=5 for unit
Process B with Fixed Cost=500 and Variable Cost=15 for unit
Crossover point of unit=(Fixed Cost 1 –Fixed Cost 2)/(Variable Cost 2-Variable Cost 2)= (1000-500)/(15-5)=50 units.
This means that at 50 units, the total cost of each of the two projects is equal. If you expect to sell more than 50 units then Project A would be the best choice. If you expect to sell less than 50 units then Project B would be the best choice.
The crossover point between the process A and the process B are 50 units.
The crossover point is the degree of entries at which the average cost per student or the total cost for a distance learning program becomes lower than the average cost.
The Crossover Investigation is entirely unavoidable when we need to determine the point whether we can exchange one product to another that do have similarity in welfare, while they have various variable and fixed costs.
Computation of crossover point between the process A and B:
According to the given information,
Process A has Fixed Cost = 1000 and
Variable Cost = 5 for unit
Process B has Fixed Cost = 500 and
Variable Cost = 15 for unit
Then we should find the point for Crossover Units.
The formula of Crossover Units are:
[tex]\text{Crossover Unit}=\dfrac{\text{(Fixed Cost 1 -Fixed Cost 2)}}{\text{(Variable Cost 2-Variable Cost 2)}}[/tex]
Now, put the given values in the above formula,
[tex]\text{ Crossover Units}=\dfrac{(\$1,000-\$500)}{(\$15-\$5)}\\\\\text{ Crossover Units}=50 \text{Units}[/tex]
Therefore, the crossover units point between product A and B are 50 units. So, option A is correct.
Learn more about the crossover point, refer to:
https://brainly.com/question/15399597
