Koch Brothers Purchased a New Production Machine for $200,000

Multiple Choice

Koch Brothers purchased a new production machine for $200,000. It is capable of producing 400,000 units over its useful life, thus the manufacturer's salesperson claimed the unit cost would only be $0.50. Koch's own engineers recommended that the company acquire a machine that would have a unit cost of production of no more than $0.48 (with a $0.03 variance) . A competitor of the vendor, who also was trying to sell Koch some equipment, claimed that the $0.50 is understated by $0.04 per unit. The total anticipated demand over the asset's useful life is 300,000 units.
Relevant information includes

A) the $0.50 unit cost.
B) the fact that the $0.50 falls below the $0.48 + $0.03 variance.
C) the unit cost at Koch's planned capacity utilization.
D) being able to produce at excess capacity.
E) the different unit costs of production between the two vendors' machines.