a. At what volume of output would the two locations have the same total cost? b. Which alternative would yield the lowest total cost for an expected annual volume of 150 boats?
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- A company that produces pleasure boats has decided to expand one of its lines. Current facilities are insufficient to handle the increased workload, so the company is considering three alternatives. A (new location), B (subcontract), and C (expand existing facilities). Alternative A would involve substantial fixed costs but relatively low variable costs: fixed costs would be $315,000 per year, and variable costs would be $600 per boat. Subcontracting would involve a cost per boat of $2,580, and expansion would require an annual fixed cost of $58,000 and a variable cost of $1,040 per boat. a. Find the range of output for each alternative that would yield the lowest total cost. (Leave no cells blank be certain to enter "0" wherever required. Round your answers to the nearest whole number.) A B C or to OA OB OC to more b. Which alternative would yield the lowest total cost for an expected annual volume of 90 boats? c. What other factors might be considered in choosing between expansion…A company that produces pleasure boats has decided to expand one of its lines. Current facilitiesare insufficient to handle the increased workload, so the company is considering three alternatives,A (new location), B (subcontract), and C (expand existing facilities).Alternative A would involve substantial fixed costs but relatively low variable costs: fixedcosts would be $250,000 per year, and variable costs would be $500 per boat. Subcontractingwould involve a cost per boat of $2,500, and expansion would require an annual fixed cost of$50,000 and a variable cost of $1,000 per boat.a. Find the range of output for each alternative that would yield the lowest total cost.b. Which alternative would yield the lowest total cost for an expected annual volume of 150 boats?c. What other factors might be considered in choosing between expansion and subcontracting?A company that produces pleasure boats has decided to expand one of its lines. Current facilities are insufficient to handle the increased workload, so the company is considering three alternatives, A (new location), B (subcontract), and C (expand existing facilities).Alternative A would involve substantial fixed costs but relatively low variable costs: fixed costs would be $260,000 per year, and variable costs would be $610 per boat. Subcontracting would involve a cost per boat of $2,570, and expansion would require an annual fixed cost of $61,000 and a variable cost of $1,090 per boat.
- A company that produces pleasure boats has decided to expand one of its lines. Current facilities are insufficient to handle the increased workload, so the company is considering three alternatives, A (new location), B (subcontract), and C (expand existing facilities). Alternative A would involve substantial fixed costs but relatively low variable costs: fixed costs would be $250,000 per year, and variable costs would be $500 per boat. Subcontracting would involve a cost per boat of $2,500, and expansion would require an annual fixed cost of $50,000 and a variable cost of $1,000 per boat. a. Find the range of output for each alternative that would yield the lowest total cost. (Leave no cells blank - be certain to enter "0" wherever required. Round your answers to the nearest whole number. Do not include the indifference point in your answer.) A B C → OA OB OC or to to more b. Which alternative would yield the lowest total cost for an expected annual volume of 150 boats? C. What other…Peggy Lane Corp., a producer of machine tools, wants to move to a larger site. Two alternative locations have been identified: Bonham and McKinney Bonham would have fixed costs of $780,000 per year and variable costs of $15,000 per standard unit produced McKinney would have annual fixed costs of $920,000 and variable costs of $13,800 per standard unit. The finished items sell for $30,000 each. a) The volume of output at which both the locations have the same profit = standard units (round your response to the nearest whole number). b) Based on the analysis of the volume, after rounding the numbers to the nearest whole number, Bonham is superior below c) Based on the analysis of the volume, after rounding the numbers to the nearest whole number, McKinney is superior above d) The break-even point for Bonham is The break-even point for McKinney is units. (Enter your response rounded to the nearest whole number) units. (Enter your response rounded to the nearest whole number) standard…During a major expansion in 2004, Douwalla’s Import Company developed a new processing line for which the delivered equipment cost was $1.75 million. This year, the board of directors decided to expand into new markets and expects to build the current version of the same line. Estimate the cost if the following factors are applicable: construction cost factor is 0.20, installation cost factor is 0.50, indirect cost factor applied against equipment is 0.25, and the total plant cost index has risen from 2509 to 3713 over the years.
- The owner of Genuine Subs, Inc., hopes to expand the present operation by adding one new outlet.She has studied three locations. Each would have the same labor and materials costs (food, servingcontainers, napkins, etc.) of $1.78 cents per sandwich. Sandwiches sell for $2.43 each in all locations.Rent and equipment costs would be $5,000 per month for location A, $6,500 per month forlocation B, and $5,800 per month for location C.a. Determine the volume necessary at each location to realize a monthly profit of $10,000.b. If expected sales at A, B, and C are 22,000 per month, 21,000 per month, and 20,000 per month,respectively, which location would yield the greatest profits?2. Cami-Clothes Cleaners is a dry cleaning business that is considering four possible sites for its new operation. The annual fixed and variable costs for each site have been estimated as follows: Fixed Costs $350,000 $170,000 $100,000 $250,000 Variable Costs $5/Unit $25/Unit $40/Unit $20/Unit Location A B C D a. If demand is expected to be 10,000 units per year, which is the best location?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?
- Location A would result in annual fixed costs of $300,000 and variable costs of $55 per unit. Annual fixed costs at Location B are $600,000 with variable costs of $32 per unit. Sales volume is estimated to be 30,000 units per year. Which location has the lower cost at this volume? How large is its cost advantage? At what volume are the two facilities equal in cost?A local restaurateur, Cho Senn, is considering three options for his new Asian fusic restaurant. Option A - called Midtown - will have annual fixed costs of 42,500 an variable costs of 3.45 per customer. Option B - called Market - will have annual fixed costs of 30,000 and variable costs of 4.40 per customer. Finally Option C - called Mall has annual fixed cost of 19,500 and variable costs of 5.25 per customer. If Mr. Cho averages 8.25 in revenue per customer, what volume is required to breakeven with Option B? Your Answer: - Answer 4A small producer of machine tools wants to move to a larger building, and has identified two alternatives.Location A has annual fixed costs of $700,000 and variable costs of $13,000 per unit; locationB has annual fixed costs of $820,000 and variable costs of $13,000 per unit. The finished items sellfor $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?