Question: An operations manager has narrowed down the search for a new King Kola plant to three locations. Fixed and variable costs follow. Location Fixed Cost

An operations manager has narrowed down the search for a new King Kola plant to three locations. Fixed and variable costs follow.

Location	Fixed Cost	Variable Cost
A	$100,000	$10
B	$150,000	$7
C	$200,000	$5

Plot the total cost curves in the chart provided and identify the range over which each location would be best. Then use break-even analysis to calculate exactly the break-even quantity that defines each range. Which of the following statements is correct?

a)The break-even quantity between A and B is less than or equal to 5,000 units.

b)The break-even quantity between C and B is more than 20,000 units.

c)Location A becomes the most expensive place to produce at volumes in excess of 2,000.

d)By inspection, it is apparent that only one site will be the best place to produce, even at dramatically different output volumes.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!

3 . An operations manager has narrowed down the search for a new King Kola plant to three locations. Fixed and variable costs follow. Please use break - even analysis to calculate exactly the break -...

QUESTION 3 a . A single facility is needed to meet the demands of four markets. The locations and demands of these four markets are shown below. Market Coordinates Demand A ( 8 , 6 ) 1 0 B ( 4 , 1 2...

An operations manager has narrowed down the search for a new King Kola plant to three locations. Fixed and variable costs follow. Location Fixed Cost Variable Cost A $ 1 0 0 , 0 0 0 $ 1 0 B $ 1 5 0 ,...

An operations manager has narrowed down the search for a new King Kola plant to three locations. Fixed and variable costs follow. ? Location ?Fixed Cost ?Variable Cost ?A ?$ 1 0 0 , 0 0 0 ?$ 1 0 ?B...

An operations manager has narrowed down the search for a new King Kola plant to three locations. Fixed and variable costs follow. Table 1 Location Fixed Cost Variable Cost A $210,000 $10 B $240,000...

An operations manager has narrowed down the search for a new King Kola plant to three locations. Fixed and variable costs follow. A) fixed $100,000 Varible $10, B) fixed $150,000 Varible $7, C)...

An operations manager has narrowed down the search for a new King Kola plant to three locations. Fixed and variable costs follow. Location Fixed Cost Variable Cost A $210,000 $10 B $240,000 $7 C...

OUESTION 3 a . A single facility is needed to meet the demands of four markets. The locations and demands of these four markets are shown below. i . Using the data in Table 1 3 . 2 , identify an...

An operations manager has narrowed down the search for a new King Kola plant to three locations. Fixed and cost follow. location Fiwed cost variable costs A $ 1 0 0 , 0 0 0 $ 1 0 B $ 1 5 0 , 0 0 0 $...

To what extent should end users be involved in the selection of a database management system and database design? Respond to at least two of your classmates postings. Should all major retailing and...

Show that this is a basis for R4. (We can use the results of this subsection to simplify this job.) 0000

1 (Basic and diluted earnings per share): The Frost Company has accumulated the following information relevant to its 20X1 earnings per share. 1) Net income for the year 20X1 is $150,000. 2) Bonds...

Read the articles on journaling and review the template provided. Identify what approach, to journaling, in the articles you found useful and why. Post to the discussion forum that you have reviewed...