Name

UID

Problem Set $8$

Note: You will find the Example videos in the module very helpful in answering these questions. Please type in the space provided.

Question $1.$ Caliber Yachts in St Petersburg is going into production with a new model. 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$).(60$ points$)$

Alternative A$,$ new location, would involve substantial fixed costs but relatively low variable costs: fixed costs would be $$80,000$ per year, and variable costs would be $$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 $$65,000$ and a variable cost of $$1,250$ per boat

$\backslash$table$[[$Make sure you are comparing the correct alternatives to calculate your answer,$\backslash$table$[[$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$),,$H$]]$Name

UID

Problem Set $8$

Note: You will find the Example videos in the module very helpful in answering these questions. Please type in the space provided.

Question $1.$ Caliber Yachts in St Petersburg is going into production with a new model. 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$).(60$ points$)$

Alternative A$,$ new location, would involve substantial fixed costs but relatively low variable costs: fixed costs would be $$80,000$ per year, and variable costs would be $$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 $$65,000$ and a variable cost of $$1,250$ per boat

$\backslash$table$[[$Make sure you are comparing the correct alternatives to calculate your answer,$\backslash$table$[[$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$),,$H$]]$