Range of output that expansion would yield lowest total cost

Assignment Help Operation Management

Reference no: EM132109745

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 $250,000 per year, and variable costs would be $500 per boat. Subcontracting would involve a cost per boat of $2,500, and expansion would require an annual fixed cost of $50,000 and a variable cost of $1,000 per boat.

1) What is the range of output that expansion would yield the lowest total cost?

A. 0-100

B. 34-400

C. 100-500

D. more than 400

2) Which alternative would yield the lowest total cost for an expected annual volume of 500 boats?

A. New location

B. Subcontract

C. Expansion

D. All of them are the same

Reference no: EM132109745

Questions Cloud

Application of mechanical control : ENEM20001 Project: Application of Mechanical Control - Explain your working and models so an engineer could understand your process, results and findings

Indicate the personnel resources needed : Indicate the personnel resources needed for the investigation and assess why you believe this amount of resources is warranted.

Six steps ethical decision making human resources : What is the six steps ethical decision making human resources can approach in unions election at their organization?

Reasons why ids would benefit the company : After reviewing your latest submission, the CIO has found some areas of concern and would like you to provide a little clarity on one subject.

Range of output that expansion would yield lowest total cost : What is range of output that expansion would yield lowest total cost? Which alternative would yield the lowest total cost for expected annual volume

Explain why compliance is important to an organization : What is an IT security audit and why it is important to the organization? Explain why compliance is important to an organization.

Computing on physical machines : Identify how these differences affect the methods companies use to secure their cloud environment.

Process of implementing an information system proposal : The project is the process of implementing an information system proposal that provides a specific strategic direction while setting company performance goals

Describe the most important aspect of each step : The computer forensics investigative process includes five steps: Identification, Preservation, Collection, Examination, and Presentation.

User Account

All Pages