2C2F PARKER MANUFACTURING IS ANALYZING THE MARKET POTENTIAL FOR ITS S...
234.
CSO: 2C2b
LOS: 2C2f
Parker Manufacturing is analyzing the market potential for its specialty turbines. Parker
developed its pricing and cost structures for their specialty turbines over various relevant
ranges. The pricing and cost data for each relevant range are presented below.
Units produced and sold 1 - 5
6 - 10 11 - 15
16 - 20
Total fixed costs
$200,000
$400,000 $600,000
$800,000
Unit variable cost
50,000
50,000
45,000
45,000
Unit selling price
100,000
100,000
100,000
100,000
Which one of the following production/sales levels would produce the highest operating
income for Parker?
a.
8 units.
b.
10 units.
c.
14 units.
d.
17 units.