The operations manager has narrowed down the search for a new plant to three locations. Fixed and variable costs follow: $$\begin{array} { | l | l | l | }
\hline \text { Location } & \text { Fixed Costs } & \text { Variable Costs } \
& \text { Per Year } & \text { Per Unit } \
\hline \text { A } & 70,000 & 25 \
\text { B } & 120,000 & 22 \
\text { C } & 250,000 & 17 \
\hline
\end{array}$$ 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 to calculate exactly the break- even quantity that defines each range. $$73$$ a. What is the break- even quantity between A and B?
b. What is the break- even quantity between B and C?

Question

The operations manager has narrowed down the search for a new plant to three locations. Fixed and variable costs follow: $$\begin{array} { | l | l | l | } 
\hline \text { Location } & \text { Fixed Costs } & \text { Variable Costs } \
& \text { Per Year } & \text { Per Unit } \
\hline \text { A } & 70,000 & 25 \
\text { B } & 120,000 & 22 \
\text { C } & 250,000 & 17 \
\hline
\end{array}$$ 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 to calculate exactly the break- even quantity that defines each range. $$73$$  a. What is the break- even quantity between A and B?
b. What is the break- even quantity between B and C?

Quizplus · Accepted Answer

The Answer of The operations manager has narrowed down the search for a new plant to three locations. Fixed and variable costs follow: $$\begin{array} { | l | l | l | } 
\hline \text { Location } & \text { Fixed Costs } & \text { Variable Costs } \
& \text { Per Year } & \text { Per Unit } \
\hline \text { A } & 70,000 & 25 \
\text { B } & 120,000 & 22 \
\text { C } & 250,000 & 17 \
\hline
\end{array}$$ 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 to calculate exactly the break- even quantity that defines each range. $$73$$  a. What is the break- even quantity between A and B?
b. What is the break- even quantity between B and C?

The Operations Manager Has Narrowed Down the Search for a New