$2$

$67\%$

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$).(60$ points$)$

Alternative A$,$ new location, would involve substantial fixed costs but relatively low variable costs: fixed costs would be $$100,000$ per year, and variable costs would be $$1,000$ per boat.

Alternative B$,$ subcontracting would involve a cost $($VC$)$ per boat of $$5,000$

Alternative C$,$ expansion would require an annual fixed cost of $$50,000$ and a variable cost of $$1,250$ per boat

$\backslash$table$[[\backslash$table$[[$Make sure you are comparing the$],[$correct alternatives to calculate your$],[$answer$]],\backslash$table$[[$Enter $$ or $>$