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Briar Company manufactures and sells dresses at a variable cost of $ 1 8 each and a fixed cost of x . It can sell

Briar Company manufactures and sells dresses at a variable cost of $18 each and a fixed cost of x. It can sell 6,800 dresses at a selling price of $60 to earn an operating income of $85,600(Option 1) or it can sell 5,800 dresses at a selling price of $72 and another 3,300 dresses at a selling price of $62(Option 2). Which alternative should Briar choose?
Option 1 operating income:
Option 2 operating income:
\table[[$,85,600],[$,258,400],[,Option 2]]
Briar should choose
Option 2
2. Chance Corporation manufactures and sells a special kind of ball bearing. Its cost structure depends on the number of bearings it produces. Its fixed costs and variable manufacturing cost per unit for different ranges of production are described in the following table:
(Click the icon to vie the table.)
Chance's sales director believes the company can sell 2,300 units at a selling price of $400; or 3,300 units at a price of $350; or 6,800 units at a price of $250. If it chose to sell 6,800 units, however, it would incur additional advertising costs of $62,000 and variable selling costs of $7 per unit. Should Chance Corporation plan to produce and sell (a)2,300 units (b)3,300 units or (c)6,800 units?
(a) If Chance sells 2,300 units, its operating income will be
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