Question: Downhill Boards DB a producer of snow boards is evaluating
Downhill Boards (DB), a producer of snow boards, is evaluating a new process for applying the finish to its snow boards. Downhill Boards currently incurs a fixed annual cost of $125,000 and has a variable cost of $0.90 per unit. Annual demand for the snow boards is 160,000. Fast Finish, Inc. (FFI) has made a technological breakthrough in snow board finish application. FFI will apply the finish for $0.23 per unit in variable costs plus a fixed annual cost of $230,000.
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