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Morgan's Selling Price 135 Process 1 Process 2 Fixed Cost 110,000 45,000 Variable Cost. 40 100 Labor Hours / unit 4 10 Suppose that Morgan

Morgan's Selling Price 135

Process 1 Process 2

Fixed Cost 110,000 45,000

Variable Cost. 40 100

Labor Hours / unit 4 10

Suppose that Morgan is going to produce at 1300 units and would choose Process 1, but the labor union has offered to reduce hourly wages to make process 2 more attractive. What reduction in hourly wages would make Morgan indifferent to the two processes at 1300 units?

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