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sinnefoula sinnefoula
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7 years ago
A firm is considering two location alternatives. At location A, fixed costs would be $4,000,000 per year, and variable costs $0.30 per unit. At alternative B, fixed costs would be $3,600,000 per year, with variable costs of $0.35 per unit. If annual demand is expected to be 10 million units, which plant offers the lowest total cost?
A) Plant A, because it is cheaper than Plant B for all volumes.
B) Plant A, because it is cheaper than Plant B for all volumes over 8,000,000 units.
C) Plant B, because it is cheaper than Plant A for all volumes over 8,000,000 units.
D) Plant B, because it has the lower variable cost per unit.
E) Neither Plant A nor Plant B, because the crossover point is at 10 million units.
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Operations Management

Operations Management


Edition: 10th
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kadajikadaji
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sinnefoula Author
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7 years ago
Helped a lot
gma_of_7
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Yesterday
Thanks
bkrandy
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2 hours ago
Thanks for your help!!
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