The management of a firm wants to introduce a new product. The product is expected to sell for $$4$ a unit and can be produced by either of two cost structures $($a combination of fixed and variable costs$).$ In the first, total costs are TC $5$ $$3,0001$ $$2\mathrm{.}8$Q In the second cost structure, total costs are TC $5$ $$5,0001$ $$2\mathrm{.}4$Q

d$.$ The anticipated levels of sales are the following:

YEAR UNIT SALES

$14,000$

$25,000$

$36,000$

$47,000$ If management selects the cost structure with higher fixed costs, what can it expect in years $1$ and $2?$ On what grounds can management justify selecting this cost structure? If sales reach only $5,000$ a year, was the correct cost structure chosen?