Excel Products is planning a new warehouse to serve the Southeast. Locations A, B, and C are under consideration. Fixed and variable costs follow:
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 as necessary to calculate exactly the break- even quantity that defines each range.
Which of the following statements is correct?
A) Location B is best over all volume levels.
B) The total cost of location A, if the volume is 250,000 units, is over $7,000,000.
C) Location A is the best one if volumes are quite high.
D) The break- even quantity between A and B is more than 75,000 units but less than 200,000 units.
Correct Answer:
Verified
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