Question: I am having trouble finding the equation that I would use to find the range of output for each alternative. Can someone provide guidance on
I am having trouble finding the equation that I would use to find the range of output for each alternative. Can someone provide guidance on how to work the problem?
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 alternatives, A (new location), B (subcontract), and C (expand existing facilities). Alternative A would involve substantial fixed costs but relatively low variable costs: fixed costs would be $265,000 per year, and variable costs would be $560 per boat. Subcontracting would involve a cost per boat of $2,560, and expansion would require an annual fixed cost of $54,000 and a variable cost of $1,040 per boat. a. Find the range of output for each alternative that would yield the lowest total cost.
| A | or | more | |
| B | to | ||
| C | to |
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