Coral Gables Machine Shop has a contract for 12,000 units of a new product. Samsung Jordan, the owner, has calculated the cost for two process alternatives. Fixed costs will be: for A equipment (A), $100,000 and B manufacturing (B), $70,000. Variable costs will be: A, $2.5; and B, $5.5.

a) Identify the volume ranges where each process should be used.

b) Based on above question (a), which alternative should he choose? Explain your result.