Candies manufactures jaw-breaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 4 comma 2004,200 per month. The machine costs $ 6 comma 000$6,000 and is depreciated using straight line depreciation over 10 years assuming zero residual value. Rent for the factory space and warehouse and other fixed manufacturing overhead costs total $ 1 comma 500$1,500 per month. Gummy LandGummy Land currently makes and sells 3 comma 1003,100 jaw-breakers per month. Gummy LandGummy Land buys just enough materials each month to make the jaw-breakers it needs to sell. Materials cost 2020 cents per jaw-breaker. Next year Gummy LandGummy Land expects demand to increase by 100%. At this volume of materials purchased, it will get a 10% discount on price. Rent and other fixed manufacturing overhead costs will remain the same.

Requirements

1. What is Gummy LandGummy Land's current annual relevant range of output?

2. What is Gummy LandGummy Land's current annual fixed manufacturing cost within the relevant range? What is the annual variable manufacturing cost?

3. What will Gummy LandGummy Land's relevant range of output be next year? How if at all, will total annual fixed and variable manufacturing costs change next year? Assume that if it needs to Gummy LandGummy Land could buy an identical machine at the same cost as the one it already has.