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Fixed and variable costs for four potential plant locations are shown below:   Location    Fixed Costs/year       Variable Cost/Unit       A       RM 250,000    RM 11       B       RM 100,000    RM 30       C       RM 150,000    RM 20       D       RM 200,000    RM 35 a. If expected output at the selected location is to be 8,000 units per       year, which location would provide the lowest total cost? b. Plot the total-cost lines for these locations on a single graph c. Identify the range of output for which each alternative is superior     (i.e. has the lowest total cost)

Fixed and variable costs for four potential plant locations are shown below:   Location    Fixed Costs/year       Variable Cost/Unit       A       RM 250,000    RM 11       B       RM 100,000    RM 30       C       RM 150,000    RM 20       D       RM 200,000    RM 35 a. If expected output at the selected location is to be 8,000 units per       year, which location would provide the lowest total cost? b. Plot the total-cost lines for these locations on a single graph c. Identify the range of output for which each alternative is superior     (i.e. has the lowest total cost)

Practical Management Science
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...
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Fixed and variable costs for four potential plant locations are shown below:

  Location    Fixed Costs/year       Variable Cost/Unit
      A       RM 250,000    RM 11
      B       RM 100,000    RM 30
      C       RM 150,000    RM 20
      D       RM 200,000    RM 35

a. If expected output at the selected location is to be 8,000 units per  
    year, which location would provide the lowest total cost?

b. Plot the total-cost lines for these locations on a single graph

c. Identify the range of output for which each alternative is superior 
   (i.e. has the lowest total cost)

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