Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
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 $590 per boat. Subcontracting would involve a cost per boat of $2,520, and expansion would require an annual fixed cost of $53,000 and a variable cost of $1,020 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 | to | ___ |
C | ___ to | to | ___ |
b. | Which alternative would yield the lowest total cost for an expected annual volume of 280 boats? |
multiple choice
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started