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Suppose a company has two processes to choose from. Process A will incur a total fixed cost of $1 million a year and a per-unit variable cost of $4. Process B will incur a total fixed cost of $1.5 million a year and a per-unit variable cost of $3.
(a) What is the cross-over point? Please provide the formula, at least one step of calculation, and the correct answer for full credit.
(b) What is the volume range over which Process A will incur a lower total cost? And why? Please provide the correct range of production volume and the reason for full credit.
a. How much are the incremental revenues associated with the special order? b. How much are the incremental costs associated with the special order? c. How much additional profit or loss will be incurred if the order is accepted AND should it accept ..
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