An operations manager has narrowed down the search for a new King Kola plant to three locations.Fixed and variable costs follow. Plot the total cost curves in the chart provided 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. Which of the following statements is correct?
A)By inspection,it is apparent that only one site will be the best place to produce,even at dramatically different output volumes.
B)Location A becomes the most expensive place to produce at volumes in excess of 2,000.
C)The break-even quantity between A and B is less than or equal to 5,000 units.
D)The break-even quantity between C and B is more than 20,000 units.

Question

An operations manager has narrowed down the search for a new King Kola plant to three locations.Fixed and variable costs follow.  Plot the total cost curves in the chart provided 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.  Which of the following statements is correct?
A)By inspection,it is apparent that only one site will be the best place to produce,even at dramatically different output volumes. 
B)Location A becomes the most expensive place to produce at volumes in excess of 2,000. 
C)The break-even quantity between A and B is less than or equal to 5,000 units. 
D)The break-even quantity between C and B is more than 20,000 units.

Quizplus · Accepted Answer

The Answer of An operations manager has narrowed down the search for a new King Kola plant to three locations.Fixed and variable costs follow.  Plot the total cost curves in the chart provided 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.  Which of the following statements is correct?
A)By inspection,it is apparent that only one site will be the best place to produce,even at dramatically different output volumes. 
B)Location A becomes the most expensive place to produce at volumes in excess of 2,000. 
C)The break-even quantity between A and B is less than or equal to 5,000 units. 
D)The break-even quantity between C and B is more than 20,000 units.

An Operations Manager Has Narrowed Down the Search for a New