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Audi Motors is considering three sites-A, B, and C-at which to locate a factory to build its new-model automobile, the Audi SUV XL500. The
Audi Motors is considering three sites-A, B, and C-at which to locate a factory to build its new-model automobile, the Audi SUV XL500. The goal is to locate at a minimum-cost site, where cost is measured by the annual fixed plus variable costs of production. Audi Motors has gathered the following data. Variable Cost per Auto Site Annualized Fixed Cost Produced A $11,000,000 $2,500 B $20,000,000 $2,100 C $30,000,000 $1,100 The firm knows it will produce between 0 and 60,000 SUV XL500s at the new plant each year, but, thus far, that is the extent of its knowledge about production plans. a) The value of volume, V, of production above which site C is recommended = b) The value of volume, V, of production below which site A is recommended = c) Over what range of volume is site B optimal? SUV XL500s. (Round your response up to the next whole number.) SUV XL500s. (Round your response up to the next whole number.) OA. Site B is never optimal because its cost line always exceeds that of A or C for all volume levels. OB. Site B is optimal for volumes above 22,500 SUV XL500s. OC. Site B is optimal for volumes from 13,572 to 22,500 SUV XL500s. OD. Site B is always optimal because its cost line is always below that of A and C for all volume levels.
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