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A company has two manufacturing facilities: one in Alberta that produces a bulk chemical that it sells to many different retailers, and one facility in
A company has two manufacturing facilities: one in Alberta that produces a bulk chemical that it sells to many different retailers, and one facility in Ontario that is dedicated to producing a specialty chemical for one client only. The annual profit from the single client is $150,000; and, the profit from the other facility's sales is $1.500.000, after allocating combined fixed costs based on units produced. Another company has offered to lease the Ontario facilities for $250,000. Which of the following is TRUE? Select one O a. The company needs to determine the contribution margin for each product before making any decision b. Incremental costs exceed incremental revenues if the plant is rented, Oc. The company incurred a $250,000 opportunity cost for the past years, but this was not recorded on its books Od. The $250,000 is an opportunity cost of continuing to use the Ontario plant, e Incremental revenues exceed total costs it the plant is rented
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