Orleans Company has a normal range of production volumes between 100,000 units and 180,000 units per month. That is considered the relevant range for production cost analysis. If the company expands significantly beyond 180,000 units per month, which of the following would be the most likely expectation?

Question

Quizplus · Accepted Answer

If Orleans Company expands significantly beyond 180,000 units per month, both the fixed costs and the variable cost per unit may change. Fixed costs may increase due to the need for additional facilities, equipment, and employees, while the variable cost per unit may decrease due to economies of scale achieved through higher production volumes. Thus, D is the most likely expectation.

Orleans Company Has a Normal Range of Production Volumes Between