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 $ 800,000 and variable costs of $ 14,000 per unit; location B has annual fixed costs of $ 920,000 and variable costs of $ 13,000 per unit. The finished items sell for $ 17,000 each.
a. At what volume of output would the two locations have the same total cost?
b. For what range of output would location A be superior? For what range would B be superior?