After doing some research, management at Super Elliott, a 120-year-old bicycle company from Adelaide, South Australia, has concluded that bicycle consumers around the world have similar tastes and would likely buy its Australian-style vintage bicycles.  The fixed cost to restart production is Fixed Cost AUD $2,37,500.00 per model. Once production starts the variable cost to make each bicycle is Variable Cost AUD $101.00 per bike. The firm’s management is trying to decide if the firm should pursue export opportunities (Estimated combined Domestic and Foreign Sales of bicycles 3150 per model) or only concentrate on the domestic (Australian) market (Estimated Domestic Sales of bicycles 1270 per model). Calculate the total cost per bicycle for the two (2) options. Which of the two (2) options do you recommend? Why?

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To calculate the total cost per bicycle for the two options export and domestic well consider both t... View the full answer