Question

A process has a theoretical capacity of 200.000 units of output. The annual operating cost of the process is $500.000. Currently, productive capacity 120,00 units, non productive capacity 20.000 units and idle capacity is 60,000 units the company receives a new order for 10.000 units, the cost per productive unit would change from A) $2.50 to $4.17 B) 54 17 to $3.85 X . C) 52 50 0 53.85 D) The c o uld not

the formula plz

Answer 1

Cost per productive unit = Annual operating cost/Number of productive units

= 500,000/120,000

= $4.17

When, new order is received for 10,000 units, Number of productive units become = 120,000 + 10,000

= 130,000

Cost per productive unit = Annual operating cost/Number of productive units

= 500,000/130,000

= $3.85

Thus, Cost per productive unit would change from $4.17 to $3.85

Second option is the correct option

Please ask if you have any query related to the question. Thank you