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 $160,000 and variable costs of $15,000 per unit; location B has annual fixed costs of $360,000 and variable costs of $14,000 per unit. The finished items sell for $16,000 each. a. At what volume of output would the two locations have the same total cost? Volume of Output ____________unites 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.) Range of output 0 to ______________ 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.) Range of output _________________or more
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 $160,000 and variable costs of $15,000 per unit; location B has annual fixed costs of $360,000 and variable costs of $14,000 per unit. The finished items sell for $16,000 each.
a. At what volume of output would the two locations have the same total cost?
Volume of Output ____________unites
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.)
Range of output 0 to ______________
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.)
Range of output _________________or more
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