3 Problem 8-3 A small producer of machine tools wants to move to a larger buildi
ID: 394358 • Letter: 3
Question
3 Problem 8-3 A small producer of machine tools wants to move to a larger building, and has identified two alternatives. Location A has annual fxed costs of $100,000 and variable costs of $13,000 per unit, location B has annual fixed costs of $300000 and variable costs of $8,000 per unit. The finished items sell for $18,000 each 6.66 points a. At what volume of output would the two locations have the eBook References 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.) o to Range of outout 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) or more Range of output K Pre oll Nex>Explanation / Answer
a). At 40 units both locations have same cost.
Cost of Location A = 100000 + 40*13000 = $620000
Cost of Location B = 300000 + 40*8000 = $620000
b). A would be superior if more than 40 units would be produced.
c). B would be superior if less than 40 units would be produced.
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