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 OOG or to to more b. Which alternative would yield the lowest total cost for an expected annual volume of 290 boats? A B

Practical Management Science
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ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
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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
$255,000 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 $56,000 and a variable cost of $1,120
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.)
ABC
OOO
or
to
to
more
b. Which alternative would yield the lowest total cost for an expected annual volume of 290 boats?
A
B
Transcribed Image Text: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 $255,000 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 $56,000 and a variable cost of $1,120 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.) ABC OOO or to to more b. Which alternative would yield the lowest total cost for an expected annual volume of 290 boats? A B
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