Question: $ 4 , 0 0 0 , 0 0 0 per year, and variable costs $ 0 . 3 0 per unit. At alternative B
$ per year, and variable costs $ per unit. At alternative B fixed costs would be $ per year, with variable costs of $ per unit. If annual demand is expected to be million units, which plant offers the lowest total cost?
A Plant A because it is cheaper than Plant B for all volumes below units.
B Plant B because it is cheaper than Plant A for all volumes below units.
C Plant A because it is cheaper than Plant B for all volumes.
D Plant B because it has the lower variable cost per unit.
E Neither Plant A nor Plant B because the crossover point is at million units.
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