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Michael Scott Paper Company is a new competitor to Dunder Miffin Paper Company, Inc. Historically, Dunder Mifflin holds 90% of the market share of
Michael Scott Paper Company is a new competitor to Dunder Miffin Paper Company, Inc. Historically, Dunder Mifflin holds 90% of the market share of the 750 total customers in the Scranton area However, with Michael Scott Paper Company steadily gaining popularity, Dunder Miffin fears it may only retain 50% of the market share if the Michael Scott Paper Company is successful. When Dunder Miffin holds 90% of the market share, the company's annual operating expenses total $600,000. When the company's market share drops to 80%, annual operating expenses total $585,000. Which of the following statements is correct regarding the above facts? OA. If 749 customers were served, the expected costs should not be calculated using the cost behavior formula developed. OB. If the Michael Scott Paper Company turns out to be a big flop and Dunder Mifflin gains 95% of the market share, annual operating costs are expected to total $607,500 OC. If the Michael Scott Paper Company is successful, Dunder Miffin's market share drops to 338 customers OD. Monthly fixed costs total $465.000 OE. For each customer served, Dunder Miffin incurs and additional $15,000 of costs
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