Problem 8-4 (Algo) A company that produces pleasure boats has decided to expand one of its lines. Current facilities are
Posted: Fri Jul 01, 2022 9:00 am
Problem 8-4 (Algo) A company that produces pleasure boats hasdecided to expand one of its lines. Current facilities areinsufficient to handle the increased workload, so the company isconsidering three alternatives, A (new location), B (subcontract),and C (expand existing facilities). Alternative A would involvesubstantial fixed costs but relatively low variable costs: fixedcosts would be $260,000 per year, and variable costs would be $530per boat. Subcontracting would involve a cost per boat of $2,530,and expansion would require an annual fixed cost of $59,000 and avariable cost of $1,050 per boat.
a. Find the range of output for each alternative that wouldyield the lowest total cost. (Leave no cells blank - be certain toenter "0" wherever required. Round your answers to the nearestwhole number.)
b. Which alternative would yield the lowest total cost for anexpected annual volume of 160 boats? multiple choice A B C
C. What other factors might be considered in choosing betweenexpansion and subcontracting? (You may select more than one answer.Single click the box with the question mark to produce a check markfor a correct answer and double click the box with the questionmark to empty the box for a wrong answer. Any boxes left with aquestion mark will be automatically graded as incorrect.) check allthat apply
unanswered subcontracting costs will be known with greatercertainty
unanswered subcontracting provides a secondary (backup) sourceof supply
unanswered expansion offers more control over operations
unanswered expansion costs will be known with greatercertainty
unanswered subcontracting offers more control overoperations
a. Find the range of output for each alternative that wouldyield the lowest total cost. (Leave no cells blank - be certain toenter "0" wherever required. Round your answers to the nearestwhole number.)
b. Which alternative would yield the lowest total cost for anexpected annual volume of 160 boats? multiple choice A B C
C. What other factors might be considered in choosing betweenexpansion and subcontracting? (You may select more than one answer.Single click the box with the question mark to produce a check markfor a correct answer and double click the box with the questionmark to empty the box for a wrong answer. Any boxes left with aquestion mark will be automatically graded as incorrect.) check allthat apply
unanswered subcontracting costs will be known with greatercertainty
unanswered subcontracting provides a secondary (backup) sourceof supply
unanswered expansion offers more control over operations
unanswered expansion costs will be known with greatercertainty
unanswered subcontracting offers more control overoperations