The operations manager has narrowed down the search for a new plant to three locations.Fixed and variable costs follow:
$$\begin{array} { | c | c | c | }
\hline \text { Location } & \begin{array} { c }
\text { Fixed Costs } \
\text { Per Year }
\end{array} & \begin{array} { c }
\text { Variable Costs } \
\text { Per Unit }
\end{array} \
\hline \text { A } & 70,000 & 25 \
\text { B } & 120,000 & 22 \
\text { C } & 250,000 & 17 \
\hline
\end{array}$$
Plot the total cost curves in the chart provided below,and identify the range over which each location would be best.Then use break-even analysis to calculate exactly the break-even quantity that defines each range.

a.What is the break-even quantity between A and B?
b.What is the break-even quantity between B and C?

Question

The operations manager has narrowed down the search for a new plant to three locations.Fixed and variable costs follow:
 $$\begin{array} { | c | c | c | } 
\hline \text { Location } & \begin{array} { c } 
\text { Fixed Costs } \
\text { Per Year }
\end{array} & \begin{array} { c } 
\text { Variable Costs } \
\text { Per Unit }
\end{array} \
\hline \text { A } & 70,000 & 25 \
\text { B } & 120,000 & 22 \
\text { C } & 250,000 & 17 \
\hline
\end{array}$$ 
Plot the total cost curves in the chart provided below,and identify the range over which each location would be best.Then use break-even analysis to calculate exactly the break-even quantity that defines each range.
  
a.What is the break-even quantity between A and B?
b.What is the break-even quantity between B and C?

Quizplus · Accepted Answer

The Answer of The operations manager has narrowed down the search for a new plant to three locations.Fixed and variable costs follow:
 $$\begin{array} { | c | c | c | } 
\hline \text { Location } & \begin{array} { c } 
\text { Fixed Costs } \
\text { Per Year }
\end{array} & \begin{array} { c } 
\text { Variable Costs } \
\text { Per Unit }
\end{array} \
\hline \text { A } & 70,000 & 25 \
\text { B } & 120,000 & 22 \
\text { C } & 250,000 & 17 \
\hline
\end{array}$$ 
Plot the total cost curves in the chart provided below,and identify the range over which each location would be best.Then use break-even analysis to calculate exactly the break-even quantity that defines each range.
  
a.What is the break-even quantity between A and B?
b.What is the break-even quantity between B and C?

The Operations Manager Has Narrowed Down the Search for a New