[Van90]

Beth's Supplies manufactures building tiles in one plant, which has a practical capacity of 25,000 tiles. The variable cost of the tile is $9.00 per unit, and the fixed costs of the plant are $300,000 annually. Current annual demand is 20,000 tiles. Beth bought the current plant because she expected that demand for the tiles would grow once her reputation was established.

What cost per tile should the cost system report?
Cost per tile?

Given your answer to part (a), What is the cost of excess capacity?
Cost of excess capacity?

How would your answers to parts (a) and (b) change if the smallest tile manufacturing plant that one could build (owing to technology) was able to produce 25,000 tiles?
Cost per tile?
Cost of excess capacity?