Question: do the calculation accordingly please SECTION A: COMPULSORY Question One ( 20 MARks) a. A company that produces pleasure boats has decided to expand one
SECTION A: COMPULSORY Question One ( 20 MARks) a. A company that produces pleasure boats has decided to expand one of its lines. Current facilities are insufficient to handle the increased workload, so the company is considering three altematives, A (new location), B (sabcontract), and C (expand existing facilities). Alternative A would involve substantial fixed costs but relatively low variable costs: fixed costs would be $250,000 per year, and variable costs would be $500 per boat. Subcontracting would involve a cost per boat of $2,500, and expansion would require an annual fixed cost of $50,000 and a variable cost of $1,000 per boat. of alternative would yield the lowest total cost for an expected annual volume of 150 boats? ii. At what output would the total cost of alterntive A be he (3 marks) B? iii. Identify three (3) assumptions of the cost-volume analysis technique ( 4 marks) ( 3 marks)
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