Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Question
![An operations manager has narrowed down the search for a new King Kola plant to three
locations. Fixed and variable costs follow.
Fixed Cost Variable Cost
Location
A
$100,000
$10
B
$150,000
$7
C
$200,000
$5
600
Annual 500
Cost
($000) 400
i.
ii.
300
200
100
2 4
6 8 10 14 16 18 20
Q (000s of units)
Plot the total cost curves in the chart provided above and identify the range over
which each location would be best.
[7 marks]
Use break-even analysis to calculate exactly the break-even quantity that defines each
range.
[3 marks]](https://content.bartleby.com/qna-images/question/6ca52f54-f3fc-40ca-b942-8493dcca2cd1/b2d9c57d-b776-4290-b520-fbfabffb2f4e/may0orm_processed.png)
Transcribed Image Text:An operations manager has narrowed down the search for a new King Kola plant to three
locations. Fixed and variable costs follow.
Fixed Cost Variable Cost
Location
A
$100,000
$10
B
$150,000
$7
C
$200,000
$5
600
Annual 500
Cost
($000) 400
i.
ii.
300
200
100
2 4
6 8 10 14 16 18 20
Q (000s of units)
Plot the total cost curves in the chart provided above and identify the range over
which each location would be best.
[7 marks]
Use break-even analysis to calculate exactly the break-even quantity that defines each
range.
[3 marks]
SAVE
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