A small producer of machine tools wants to move to a larger building, and has id
ID: 405137 • Letter: A
Question
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 $800,000 and variable costs of $14,000 per unit; location B has annual fixed costs of $920,000 and variable costs of $13,000 per unit. The finished items sell for $17,000 each.
a.
At what volume of output would the two locations have the same total cost?
b.
For what range of output would location A be superior? For what range would B be superior?
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 $800,000 and variable costs of $14,000 per unit; location B has annual fixed costs of $920,000 and variable costs of $13,000 per unit. The finished items sell for $17,000 each.
a.
At what volume of output would the two locations have the same total cost?
b.
For what range of output would location A be superior? For what range would B be superior?
Explanation / Answer
A small producer of machine tools wants to move to a larger building, and has id
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