Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Fixed cost (per Variable cost year) (per unit) $900,000 $5 $400,000 $19 Option 1 Option 2 Arktec Manufacturing must choose between the following two capacity
Fixed cost (per Variable cost year) (per unit) $900,000 $5 $400,000 $19 Option 1 Option 2 Arktec Manufacturing must choose between the following two capacity options. Click the icon to view the options table. a. What would the cost be for each option if the demand level is 15,000 units per year? If it is 100,000 units per year? Calculate the total costs for each option if the demand level is 15,000 units per year (enter your responses as whole numbers). Total cost (per year) Option 1 Option 2 Demand (units per year) 15,000 15,000 Find the total costs for each option if the demand level is 100,000 units per year (enter your responses as whole numbers). Total cost (per year) Demand (units per year) 100.000 100,000 Option 1 Option 2 b. In general, which option do you think would be better as volume levels increase? As they decrease? O A. As volume levels increase, Option 1 will be better, since the fixed cost is lower. As volumes decrease, Option 1 will be better, as the variable cost is lower. OB. As volume levels increase, Option 2 will be better, since the variable cost is lower. As volumes decrease, Option 1 will be better, as the fixed cost is lower. O C. As volume levels increase Option 1 will be better, since the variable cost is lower. As volumes decrease, Option 2 will be better, as the fixed cost is lower. O D. As volume levels increase, Option 2 will be better, since the fixed cost is lower. As volumes decrease, Option 2 will be better, as the variable cost is lower. c. The indifference point is units. (Enter your response rounded to the nearest whole number.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started