You are hired as a consultant to help your client decide between two highly specialized equipment. Both can produce the same product your client wants. The selling price of the product will be $25. The initial investment to acquire and install the equipment X is $256,000. The unit variable cost will be $16 with equipment X. The initial investment and installation cost of equipment Y is $120,000. The unit variable cost will be $20 with equipment Y. If the product has a total demand of 20,000 over its life cycle, which statement is correct? A. Choosing X is better than choosing Y, so the client will be profitable.
B. Choosing Y is better than choosing X, so the client will be profitable.
C. The break-even production volume (the volume that total cost is equal to the total revenue) for X is smaller than 22,000.
D. Both equipment X and equipment Y will be profitable to use.
E. Choosing nothing as neither equipment X nor equipment Y will be profitable to use.