A soft drink company has three bottling plants thoughout the country. Bottling occurs at the regional level because of the high cost of transporting bottled soft drinks. The parent company supplies each plant with the syrup. The bottling plants combine the syrup with carbonated soda to make and bottle the soft drinks. The bottled soft drinks are then sent to regional grocery stores.The bottling plants are treated as cost centers. The managers of the bottling plants are evaluated based on minimizing the cost per soft drink bottled and delivered. Each bottling plant uses the same equipment, but some produce more bottles of soft drinks because of different demand. The costs and output for each bottling plant are:

Units produced Variable costsFixed costs

Plant A:10,000,000units$200,000$1,000,000

Plant B:20,000,000units$450,000$1,000,000

Plant C:30,000,000units$650,000$1,000,000

a. Estimate the average cost per unit for each plant.

b. Why would the manager of Plant A be unhappy with using the average cost as the performance measure? c. What is an alternative performance measure that would make the manager of plant A happier? d. Under what circumstances might the average cost be a better performance measure?