Air Bus Manufacturing estimates that the variable cost per unit of making five or less buses per month is €150,000 per bus. The variable cost per unit of making six to 25 buses per month is €100,000. Also, the variable cost per unit of making more than 25 buses per month is €200,000. There are no fixed costs using this method of analyzing costs.

a. How does each level of output relate to the concepts of start-up costs and capacity?

b. What is the estimate of fixed costs at the normal level of operations?