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A small producer of machine tools wants to move to a larger building, and has identified two alternatives

Business

A small producer of machine tools wants to move to a larger building, and has identified two alternatives. Location A has annual fixed costs of $210,000 and variable costs of $16,000 per unit; location B has annual fixed costs of $410,000 and variable costs of $12,000 per unit. The finished items sell for $22,000 each.

 

a) At what volume of output would the two locations have the same total cost?

Volume of output_____

b) For what range of output would location A be superior? (Enter your answer as a whole number.  Do not include the indifference point in your answer.)

Range of output_____

c) For what range would B be superior? (Enter your answer as a whole number.  Do not include the indifference point in your answer.)

Range of output_____

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