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

Make sure you are comparing the

correct alternatives to calculate your

answer

Enter $<$ or $>$

$(10$ points$)$

Enter Output

Amount $(10$ points$)$

a$.$ Subcontracting $($B$)$ will be the

best choice if output is $($enter

less than or greater than$)$ how

many boats?

b$.$ A new location $($A$)$ will be the

best choice if output $($enter

less than or greater than$)$ how

many boats?

c$.$ What other factors might you

consider when choosing

between expanding $($C$)$

and subcontracting $($B$)?$

$(20$ points$)$