Question

1. Total cost = fixed cost + number of units x variable cost

 process Fixed variable number of units Total cost GPE 125000 16 200000 3325000 FMS 250000 14.75 200000 3200000 DM 500000 13.75 200000 3250000

Since FMS has least cost, it is most suitable method.

2.

Cost with HP unit = 3000+200*80 =19000

Cost with SP unit = 1800+240*80 = 21000

HP is better as it has lower cost

3. Actual output = efficiency x effective capacity

=0.8*6000 =4800

4. Effective capacity = actual output / efficiency = 400/0.75 =533.33 =533 units

Note: As per policies, I can answer first 4 parts of a question. Inconvenience is regretted

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