QUESTION $21$

PROBLEM $C$: Use the following $to$ answer question $21-22$:

Ann $is$ the president $of$ the Paper Supply Company. She $is$ thinking about using different technology $to$ produce the paper goods her company sells. Sales have been

increasing and are currently around $12,000$ tons per year. She has identified the following potential options:

Alternative $1-$ Use the current technology with annual fixed costs $of$ $$15,000$ and variable costs $of$ $$11$ per ton.

Alternative $2-$ Adopt the latest technology resulting $in$ annual fixed costs $of$ $$45,000$ and variable costs $of$ $$7$ per ton.

Alternative $3-$ Update the current technology resulting $in$ annual fixed costs $of$ $$25,000$ and variable costs $of$ $$9$ per ton.

The two relevant cross$-$over volumes $(those$ volumes $at$ which you would shift from one process $to$ another$).$

$a.7,500$&$10,000$

$b.5,000$&$10,000$

$c.8,500$&$10,000$

$d.5,000$&$7,500$

QUESTION $22$

Which alternative would you recommend?

$a.$ Alternative $1$

$b.$ Alternative $2$

$c.$ Alternative $3$

$d.$ Any $of$ the above