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MJMPM,LLC is currently evaluating three options for their graphite golf club shaft production operation: small job shop; large job shop and repetitive focus manufacturing. The Small shop has a fixed cost of $3,000 /month and produces at a total variable cost of $10 per shaft. The Large job shop has fixed costs of $12,000/month and Variable Costs of $2 per unit. The Repetitive Focus option has fixed costs of $50,000 and variable costs total $1 per unit. 1. At what Volume does the large job shop become less expensive than the small job shop? 2. Which of the 3 options offers the lowest cost at a volume of 40,000 units? (show the cost of all three options)
Which location would minimize the total costs, given an annual productoi of 50,000 units? For what levels of manufacture and distribution would each location be best?
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