The fixed and variable costs for three potential manufacturing plant sites for a rattan chair weaver...

The fixed and variable costs for three potential manufacturing plant sites for a rattan chair weaver are shown

PART (A)

A business is trying to decide what facility to use to produce its products. In the following table you have fixed and variable costs listed for each of three facilities.

Site	Fixed Cost per Year	Variable Cost per Unit
1	$500.00	$11.00
2	$1,000.00	$7.00
3	$1,700.00	$4.00

Over what range of production is each location optimal? Clearly show your graph as well as specify range of production for each site. PLEASE USE EXCEL FOR THIS PROBLEM.

PART (B)

If the production is 200 units, which site is the best?

Solutions

Expert Solution

Part A

Let x be the number of units produced. For each site the total cost can be modelled as per the following equations on the principle that total cost is equal to Fixed Cost plus variable cost

Site 1 : y = 500 + 11*x

Site 2 : y = 1000 + 7 *x

Site 3 : y = 1,700 + 4*x

We can see that these lines have a reducing slope and meet each other at 3 distinct points which can be determined by solving the 3 sets of simultaneous equations.

Solvinf 1 and 2 together we get x = 125, y = 1875. Solving 2 and 3 together we get x = 700/3 = 233.33 , y = 5200/3 = 2633.33 and solving 3 and 1 together we get x = 1200/7 = 171.42 , y = 1885.71.

Hence we see that site 1 is optimal for production less than 125, Site 2 between 125 and 233.33, and Site 3 for x > 233.33.

Part B :

For x = 200. Site 2 is the best at Cost = 1000 + 7*200 = 2400. Site 1 at 200 units will be 500 + 11*200 = 2700 and Dite 3 will be 1700 + 4*200 = 2500.

The graph is illustrated below

keosha answered 1 week ago

Next > < Previous

Related Solutions

3. The fixed and variable costs for 3 potential plant sites for a ski equipment manufacturer...

3. The fixed and variable costs for 3 potential plant sites for a ski equipment manufacturer are shown below. Site Fixed Cost Per Year Variable Cost Per Unit Atlanta $250 $7 Burlington $500 $6 Cleveland $1000 $5 (a) Graph the total cost lines for the three potential sites. (use x=0 and x=300 to draw the graph) (Note that you must show 2 intersection points on the graph). (3 points) (b) Over what range of annual volume is each location...

Fixed and variable costs for four potential plant locations are shown below: Location Fixed Cost Variable...

Fixed and variable costs for four potential plant locations are shown below: Location Fixed Cost Variable Cost per Year per Unit A $200,000 $18 B $120,000 $25 C $150,000 $20 D $250,000 $18 not using excel please. The maximum production volume is 40,000 units. Find the best location based on the maximum production volume. Find the volume range/location recommendations.

Tech Com's. predicted 2017 variable and fixed costs are as follows: Variable costs Fixed costs Manufacturing...

Tech Com's. predicted 2017 variable and fixed costs are as follows: Variable costs Fixed costs Manufacturing 480,000 315900 Selling and Administrative 216,000 60500 Total 696,000 376,400 Tech com. produces a wide variety of computer interface devices. Per unit manufacturing cost information about one of these products, a high-capacity flash drive is as follows: Direct material $10 Direct labor 9 Variable Manufacturing Overhead 7 Fixed Manufacturing Overhead 9 Total manufacturing costs $35 The following is the variable selling and administrative costs...

Variable Costing—Production Exceeds Sales Fixed manufacturing costs are $37 per unit, and variable manufacturing costs are...

Variable Costing—Production Exceeds Sales Fixed manufacturing costs are $37 per unit, and variable manufacturing costs are $111 per unit. Production was 91,000 units, while sales were 86,450 units. a. Determine whether variable costing income from operations is less than or greater than absorption costing income from operations. b. Determine the difference in variable costing and absorption costing income from operations. $

A company’s budgeted costs for 60,000 units are as follows: Fixed manufacturing costs $30,000 Variable manufacturing...

A company’s budgeted costs for 60,000 units are as follows: Fixed manufacturing costs $30,000 Variable manufacturing costs $15.00 per unit The company produced 50,000 units. How much is the flexible budget total manufacturing cost?

If variable manufacturing costs are $8 per unit and total fixed manufacturing costs are $454,300, what...

If variable manufacturing costs are $8 per unit and total fixed manufacturing costs are $454,300, what is the manufacturing cost per unit if: a. 5,900 units are manufactured and the company uses the variable costing concept? $ b. 7,700 units are manufactured and the company uses the variable costing concept? $ c. 5,900 units are manufactured and the company uses the absorption costing concept? $ d. 7,700 units are manufactured and the company uses the absorption costing concept? $

If variable manufacturing costs are $8 per unit and total fixed manufacturing costs are $444,000, what...

If variable manufacturing costs are $8 per unit and total fixed manufacturing costs are $444,000, what is the manufacturing cost per unit if a. 6,000 units are manufactured and the company uses the variable costing concept? $ b. 7,400 units are manufactured and the company uses the variable costing concept? $ c. 6,000 units are manufactured and the company uses the absorption costing concept? $ d. 7,400 units are manufactured and the company used the absorption costing concept?

If variable manufacturing costs are $10 per unit and total fixed manufacturing costs are $325,000, what...

If variable manufacturing costs are $10 per unit and total fixed manufacturing costs are $325,000, what is the manufacturing cost per unit if a. 5,000 units are manufactured and the company uses the variable costing concept? $ b. 6,500 units are manufactured and the company uses the variable costing concept? $ c. 5,000 units are manufactured and the company uses the absorption costing concept? $ d. 6,500 units are manufactured and the company used the absorption costing concept? $

Variable manufacturing costs are $103 per unit, and fixed manufacturing costs are $162,000. Sales are estimated...

Variable manufacturing costs are $103 per unit, and fixed manufacturing costs are $162,000. Sales are estimated to be 7,500 units. If an amount is zero, enter "0". Do not round interim calculations. Round final answer to nearest whole dollar. a. How much would absorption costing income from operations differ between a plan to produce 7,500 units and a plan to produce 9,000 units? $ b. How much would variable costing income from operations differ between the two production plans? $

Variable manufacturing costs are $108 per unit, and fixed manufacturing costs are $53,200. Sales are estimated...

Variable manufacturing costs are $108 per unit, and fixed manufacturing costs are $53,200. Sales are estimated to be 5,300 units. If an amount is zero, enter "0". Do not round interim calculations. Round final answer to nearest whole dollar. a. How much would absorption costing income from operations differ between a plan to produce 5,300 units and a plan to produce 7,600 units?

Subjects