A firm is considering two location alternatives. At location C, fixed costs would be $4,000,000 per year, and variable costs $0.45 per unit. At alternative D, fixed costs would be $5,000,000 per year, with variable costs of $0.40 per unit. If annual demar s expected to be 20 million units, which plant offers the lowest total cost? Felect one: a. Plant D, because Plant D is cheaper than Plant C for all volumes below 25 million units. O b. Neither Plant C nor Plant D, because the crossover point is at 20 million uni O c. Plant C, because Plant C is cheaper than Plant D for all volumes below 25 million units.
A firm is considering two location alternatives. At location C, fixed costs would be $4,000,000 per year, and variable costs $0.45 per unit. At alternative D, fixed costs would be $5,000,000 per year, with variable costs of $0.40 per unit. If annual demar s expected to be 20 million units, which plant offers the lowest total cost? Felect one: a. Plant D, because Plant D is cheaper than Plant C for all volumes below 25 million units. O b. Neither Plant C nor Plant D, because the crossover point is at 20 million uni O c. Plant C, because Plant C is cheaper than Plant D for all volumes below 25 million units.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
Related questions
Question
Transcribed Image Text:A firm is considering two location alternatives. At location C, fixed costs would be
$4,000,000 per year, and variable costs $0.45 per unit. At alternative D, fixed costs
would be $5,000,000 per year, with variable costs of $0.40 per unit. If annual deman
is expected to be 20 million units, which plant offers the lowest total cost?
Select one:
a. Plant D, because Plant D is cheaper than Plant C for all volumes below 25
million units.
O b. Neither Plant C nor Plant D, because the crossover point is at 20 million unit
O c. Plant C, because Plant C is cheaper than Plant D for all volumes below 25
million units.
Locational Co
•X= Volume
• Y= Cost
• Cost depends or
• Fixed cost y-in
• Variable cost% D
Locational C
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Recommended textbooks for you
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.