Karla's candle factory is considering two different manufacturing options. Option A is highly automated with fixed costs of $25,000 and variable costs of $.1/candle
Option B uses hand labor with fixed costs of $10,000 and variable costs of $.5/candle. If demand for Karla's candles is 25,000, which option should she pick?
Option A: $25,000 + .1(25,000 ) = $27,500
Option B: $10,000 + .5(25,000 ) = $22,500
Karla should pick Option B
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