Question
Question 2 - 2. Coste Corporation manufactures and sells a special kind of ball bearing. Its cost structure depends on the number of bearings
Question 2 - 2. Coste 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: Variable Manufacturing Production Range in Units Fixed Costs Cost per Unit 1-3,000 units produced $ 275,000 65 3,001-6,000 units produced $ 375,000 S 40 6,001-10,000 units produced $ 795,000 $ 30 Coste's sales director believes the company can sell 2,200 units at a selling price of $370; or 4,700 units at a price of $270; or 7,700 units at a price of $220. If it chose to sell 7,700 units, however, it would incur additional advertising costs of $62,000 and variable selling costs of $12 per unit. Should Coste Corporation plan to produce and sell (a) 2,200 units (b) 4,700 units or (c) 7,700 units?
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