Question

In: Operations Management

A firm has narrowed down the search for its new plant location to three locations. The...

A firm has narrowed down the search for its new plant location to three locations. The fixed and variable costs for each of the three locations are as given below:

Location

Fixed Cost

Variable Cost

A

$100,000

$10

B

$150,000

$7

C

$200,000

$5

The break-even quantity between C and B is more than 20,000 units.

True

False

Solutions

Expert Solution

Answer: TRUE

Explanation: Let Breakeven quantity = P

For Breakeven quantity between C and B,

Total cost (Location C) = Total cost (Location B)

200,000 + 5P = 150,000 + 7P

2P = 50,000

P = 25000 Units                

keosha answered 2 years ago
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