Three process viz, automatic, semi-automatic and manual can be used to produce an item. The initial annual fixed cost and variable cost/unit for each of them is given below:
|
Process
|
Annual fixed cost
Rs.
|
Variable cost unit
Rs.
|
|
Automatic A
|
2,50,000
|
10
|
|
Semi-automatic S
|
1,50,000
|
20
|
|
Manual M
|
50,000
|
60
|
- Draw the total annual cost curves for the processes.
- Find the range of production volume for each process when it is most economical.
- Which process will you recommend if the forecast production is 8000 unit/annum?
- What is the most economic unit cost if the production is 8000 units/annum?