Question: mimis fixtures manufactures kitchen tiles in one plant which has...
Mimi's Fixtures manufactures kitchen tiles in one plant, which has a practical capacity of 30,000 tiles. The variable cost of the tile is $18 per unit, and the fixed costs of the plant are $600,000 annually. Current annual demand is 25,000 tiles. Mimi bought the current plant because she expected that demand for the tiles would grow once per reputation was established.
What is the cost of unused capacity?