Problem $8-4($Algo$)$

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 $$260,000$ per year, and variable costs would be $$610$ per boat. Subcontracting would involve a cost per boat of $$2,600,$ and expansion would require an annual fixed cost of $$53,000$ and a variable cost of $$1,110$ per boat.

a$.$ Find the range of output for each alternative that would yield the lowest total cost. $($Leave no cells blank $-$ be certain to enter $"0"$ wherever required. Round your answers to the nearest whole number.$)$

b$.$ Which alternative would yield the lowest total cost for an expected annual volume of $120$ boats?

multiple choice

A

B

C

C$.$ What other factors might be considered in choosing between expansion and subcontracting? $($You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.$)$

check all that apply

subcontracting costs will be known with greater certaintyunanswered

subcontracting provides a secondary $($backup$)$ source of supplyunanswered

expansion offers more control over operationsunanswered

expansion costs will be known with greater certaintyunanswered

subcontracting offers more control overoperationsunanswered