A small producer of machine tools wants to move to a larger building, and has identified...
A small producer of machine tools wants to move to a larger
building, and has identified two alternatives. Location A has
annual fixed costs of $150,000 and variable costs of $11,000 per
unit; location B has annual fixed costs of $350,000 and variable
costs of $6,000 per unit. The finished items sell for $16,000
each.
a. At what volume of output would the two
locations have the same total cost?
Volume of output ___
units
b-1. For what range of output would location A be
superior? (Enter your answer as a whole number. Do not
include the indifference point in your answer.)
Range of output
0 to ___?
b-2. For what range would B be superior?
(Enter your answer as a whole number. Do not include the
indifference point in your answer.)
Range of output ___
or more
Homework Answers
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A small producer of machine tools wants to move to a larger
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