QUESTION $17$

$3\mathrm{.}5$ points

Use the following to answer questions $15-17$

A news clipping service is considering modernization. The company is currently using a manual process that has fixed costs of $$400,000$ per year and variable costs of $$6\mathrm{.}20$ per item. The company is considering converting to a computerized process that has fixed costs of $$1,300,000$ per year and variable costs of $$2\mathrm{.}25$ per item.

Now assume that the revenue for each process is the same. The demand is believed to be $200,000$ units. What is the maximum variable cost per item for the computerized process so that it is preferred to the manual process at this level of demand?

A$.$ $$1\mathrm{.}70$

B$.$ $$1\mathrm{.}50$

C$.$ $$1\mathrm{.}42$

D$.$ $$1\mathrm{.}60$