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 $285,000 per year, and variable costs would be $620 per boat. Subcontracting would involve a cost per boat of $2,580, and expansion would require an annual fixed cost of $60,000 and a variable cost of $1,100 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 _____ or more

B to _____

C to _____

b. Which alternative would yield the lowest total cost for an expected annual volume of 220 boats?

A

B

C