Question: Only answer d & e Option 1 Option 2 Fixed cost (per year) Variable cost (per unit) $500,000 $2 per unit $100,000 $10 per unit

Only answer d & e Only answer d & e Option 1 Option 2 Fixed cost

Option 1 Option 2 Fixed cost (per year) Variable cost (per unit) $500,000 $2 per unit $100,000 $10 per unit a. What would the cost 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? Suppose the company has identified the following three possible demand scenarios: Demand (units per year) 25,000 60,000 100,000 Probability 30% 40% 30% d. What is the expected value of each option? Which option would you choose, based on this information? e. Suppose the lowest and highest demand levels are updated to 40,000 and 110,000, respectively. Recalculate the expected values. What happened

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