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Operations ManagementQ&A Librarynot certain how to calculate because it says each item sells for 17,000. also, I wouldnt be sure which numbers to graph with 1. A small producer of machine tools wants to move to a larger building, and has identified twoalternatives. Location A has annual fixed costs of $800,000 and variable costs of $14,000 perunit; location B has annual fixed costs of $920,000 and variable costs of $13,000 per unit1.The finished items sell for $17,000 each.A) State the total-cost formula:B) Calculate a second point for each location: Set a selected quantity = ____ Use q=150 unitsC) Sketch the total-cost lines for the locations on a single graph.Question

Asked Mar 2, 2019

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not certain how to calculate because it says each item sells for 17,000. also, I wouldnt be sure which numbers to graph with

1. 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 $800,000 and variable costs of $14,000 per

unit; location B has annual fixed costs of $920,000 and variable costs of $13,000 per unit1

.

The finished items sell for $17,000 each.

A) State the total-cost formula:

B) Calculate a second point for each location: Set a selected quantity = ____ Use q=150 units

C) Sketch the total-cost lines for the locations on a single graph.

Step 1

Given information:

Location A has annual fixed cost =$800,000

Variable cost=$14000per unit

Location B has annual fxed cost=$$920,000

Variable cost=$13000 per unit

Finshied iteams sells for $17000

Step 2

a)State the total cost formula

Particulars | LoctionA | LocationB |

Annual fixed costs | $800000 | $920000 |

Annual variable costs | $14000perunit | $13000perunit |

Finished items sell for $17000

Then the formula for total cost=Total fixed cost+Total variasble cost

For Location A the total cost=$800000+$14000

=$814000

For Location B the total cost=$920000+$13000

=$933000

Step 3

b)Calculate a second point for each location and set a selected quantity by using q=150units

For location A:

Total cost=$800000+$14000X

For location B:

Total cost=$920000+$13000X

Here the cross over point would be get by comparing the ...

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