Problem Set 8 Note: You will find the Example videos in the module very helpful in answering these questions. Please type in the space provided. Question 1. Caliber Yachts in St Petersburg is going into production with a new model. 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, new location, would involve substantial fixed costs but relatively low variable costs: fixed costs would be $150,000 per year, and variable costs would be $500 per boat. Alternative B. subcontracting would involve a cost per boat of $2,500 Alternative C, expansion would require an annual fixed cost of $40,000 and a variable cost of $1,250 per boat a. Subcontracting will be the best choice if output is (select less than/greater than): b. A new location will be the best choice if output : NB: Make sure you are comparing the correct alternatives to calculate your answer c. What other factors might you consider when choosing between expansion and subcontracting? Less than Less Than

Problem Set 8 Note: You will find the Example videos in the module very helpful in answering these questions. Please type in the space provided. Question 1. Caliber Yachts in St Petersburg is going into production with a new model. 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, new location, would involve substantial fixed costs but relatively low variable costs: fixed costs would be $150,000 per year, and variable costs would be $500 per boat. Alternative B. subcontracting would involve a cost per boat of $2,500 Alternative C, expansion would require an annual fixed cost of $40,000 and a variable cost of $1,250 per boat a. Subcontracting will be the best choice if output is (select less than/greater than): b. A new location will be the best choice if output : NB: Make sure you are comparing the correct alternatives to calculate your answer c. What other factors might you consider when choosing between expansion and subcontracting? Less than Less Than

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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