An operations manager has narrowed down the search for a new king kola plan to three locations. Fixed and variable costs follow:

A - Fixed Cost $100,000 and variable cost $10

B - Fixed Cost $150,000 and variable cost $7

C - Fixed Cost $200,000 and variable cost $5

 

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. Location C is the best one if volumes are less than $5000

B. Location A becomes the most expensive place to produce at volumes less than $10,000

C. The break-even quantity between A and B is less than or equal to 17,000 units

D. The break-even quantity between C and B is more than 30,000 units