Construct the long-run average total cost schedule

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Reference no: EM131347061

Kitchen Helper Company decides to produce and sell food blenders and is considering three different types of production facilities ("plants"). Plant A is a laborintensive facility, employing relatively little specialized capital equipment. Plant B is a semiautomated facility that would employ less labor than A but would also have higher capital equipment costs. Plant C is a completely automated facility using much more high-cost, high-technology capital equipment and even less labor than B. Information about the operating costs and production capacities of these three different types of plants is shown in the following table.

a. Determine the average total cost schedules for each plant type for annual outputs of 25,000, 50,000, 75,000, ..., 350,000. For output levels beyond the capacity of a given plant, assume that multiple plants of the same type are built. For example, to produce 200,000 units with Plant A, three of these plants would be built.

b. Based on the cost schedules calculated in part (a), construct the long-run average total cost schedule for the production of blenders.

Reference no: EM131347061

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