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Class Exercise 2 Viti Industries needs to choose a production method for its new product. The firm has gathered the following production cost data and
Class Exercise 2 Viti Industries needs to choose a production method for its new product. The firm has gathered the following production cost data and the price forecast: Process Annualized Fixed Price per unit ($) Variable cost per unit ($) Type Cost of plant and Labour Material Energy equipment ($) A 1,150,000 70 25 18 12 B 900,000 72 28 20 14 15 60 11 1,750,000 a) b) On the same chart (on graph paper) plot the profit line for each option Label each axis. Use 18 cm for axis (Max X) and 24 cm toy axis (12 cm for positive side and 12 cm for negative side) Compute the scales for each axis (cm) Show clearly all calculations and describe all relevant points on the graph Show and detail the breakeven point for each process. Show and label all crossover points. Perform an analysis of the volume over which each process is superior based on profit Write the range, Perform the consistency check If expected volume is 100,000 units, which process would you recommend? Show all calculations that you use to reach a conclusion If expected volume is 60,000 units, which process would you recommend? Show all calculations that you use to reach a conclusion If expected volume is 360.000 units which process would you recommend? Show all calculations that you use to reach a conclusion dl P7-2
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