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Michael Scott Paper Company is a new competitor to Dunder Mifflin Paper Company, Inc. Historically, Dunder Mifflin holds 90% of the market share of the
Michael Scott Paper Company is a new competitor to Dunder Mifflin 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 Mifflin fears it may only retain 50% of the market share if the Michael Scott Paper Company is successful. When Dunder Mifflin 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? Monthly fixed costs total $465,000 For each customer served, Dunder Mifflin incurs and additional $15,000 of costs If the Michael Scott Paper Company is successful, Dunder Mifflin's market share drops to 338 customers 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 $607,600 If 749 customers were served, the expected costs should not be calculated using the cost behavior formula developed
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