Process I requires 20 units of fixed cost and 3 units of variable costs per piece, while process ii required 50 units of fixed costs and 1 unit of variable cost per piece. For a company producing 10 pieces per day:
Option (A)
Process I should be chosen
Option (B)
Process ii should be chosen
Either of the two processes should be chosen
A combinations of the process I and process ii should be chosen
Correct Option:
Question Solution:
For process I CF + Cvx = 20 + 3 x 10 = 50
Process II CF + Cvx = 50 + 1 x 10 = 60
\ Total cast for process I is less than II
Process I is chosen