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b. The senior management of NWC, concerned that profits may not be as high as they could be, hires a costing consultancy firm - Chayne,

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b. The senior management of NWC, concerned that profits may not be as high as they could be, hires a costing consultancy firm - Chayne, Saw & Allen (whose nickname is "Chainsaw Al", or CA) -- to assess NWC's costs. CA discovers that the company has been misinterpreting its fixed and variable costs. Consequently, CA concludes that NWC's true fixed costs are only $60,000, while its true variable costs are $40.00 per widget. On the assumption that CA is correct, what would your answers to (a) be? Explain why the new answers are different (or why they are not)

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