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Consider the following two alternatives: Alternative 1 has a first cost of $325,000, an annual maintenance and operating cost
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Answer #1

We have the following information

Number of units produced in an hour = 3 units

Three workers are required at a rate of $15/hour

So, the annual variable cost for Alternative 2 is 5X. This is because, 3 workers are needed to produce 3 units in an hour, so it means one worker is needed to produce one unit in an hour. The total rate is $15 per hour which means each one is getting $5 per hour.

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