Arktec Manufacturing must choose between the following two capacity options:
a. What would the cost be for each option if the demand level is 25,000 units per year? If it is 75,000 units per year?
b. In general, which option do you think would be better as volume levels increase? As they decrease? Why?
c. What is the indifference point?

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FIXED COST VARIABLE COST (PER YEAR) (PER UNIT) Option 1 Option 2 $500,000 $100,000 $2 per unit $10 per unit