Lowest total cost for expected annual volume

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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 $550 per boat. Subcontracting would involve a cost per boat of $2,510, and expansion would require an annual fixed cost of $57,000 and a variable cost of $1,080 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.) A 260,00 or more B 0 to 2510 C 57000 to 1080 b. Which alternative would yield the lowest total cost for an expected annual volume of 200 boats?

Reference no: EM132231677

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