4. A company that produces pleasure boats has decided to expand one of its lines. Current facilities are insufficient to handle the increased workload, so the company is considering three alternatives, A (new location), B (subcontract), and C (expand existing facilities). Alternative A would involve substantial fixed costs but relatively low variable costs: fixed costs would be $250,000 per year, and variable costs would be $500 per boat. Subcontracting would involve a cost per boat of $2,500, and expansion would require an annual fixed cost of $50,000 and a variable cost of $1,000 per boat. a. Find the range of output for each alternative that would yield the lowest total cost. b. Which alternative would yield the lowest total cost for an expected annual volume of 150 boats? c. What other factors might be considered in choosing between expansion and subcontracting?

4. A company that produces pleasure boats has decided to expand one of its lines. Current facilities are insufficient to handle the increased workload, so the company is considering three alternatives, A (new location), B (subcontract), and C (expand existing facilities). Alternative A would involve substantial fixed costs but relatively low variable costs: fixed costs would be $250,000 per year, and variable costs would be $500 per boat. Subcontracting would involve a cost per boat of $2,500, and expansion would require an annual fixed cost of $50,000 and a variable cost of $1,000 per boat. a. Find the range of output for each alternative that would yield the lowest total cost. b. Which alternative would yield the lowest total cost for an expected annual volume of 150 boats? c. What other factors might be considered in choosing between expansion and subcontracting?

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

ChapterC: Cases

Section: Chapter Questions

Problem 5.2SB

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A company that produces pleasure boats has decided to expand one of its lines. Current facilities are insufficient to handle the increased workload, so the company is considering two alternatives, A (new location), B (expand existing facilities). Alternative A would involve fixed costs of $250,000 per year, and variable costs would be $500 per boat. Alternative B would require an annual fixed cost of $50,000 and a variable cost of $1,000 per boat. a. At what volume of output would the two locations have the same total cost? b. Which alternative would yield the lowest total cost for an expected annual volume of 150 boats? Formulas: Total Cost= FC + VQ Total Profit= Q (R-V) - FC
A company that produces pleasure boats has decided to expand one of its lines. Current facilitiesare insufficient to handle the increased workload, so the company is considering three alternatives,A (new location), B (subcontract), and C (expand existing facilities).Alternative A would involve substantial fixed costs but relatively low variable costs: fixedcosts would be $250,000 per year, and variable costs would be $500 per boat. Subcontractingwould involve a cost per boat of $2,500, and expansion would require an annual fixed cost of$50,000 and a variable cost of $1,000 per boat.a. Find the range of output for each alternative that would yield the lowest total cost.b. Which alternative would yield the lowest total cost for an expected annual volume of 150 boats?c. What other factors might be considered in choosing between expansion and subcontracting?
A company that produces pleasure boats has decided to expand one of its lines. Current facilities are insufficient to handle the increased workload, so the company is considering three alternatives. A (new location), B (subcontract), and C (expand existing facilities). Alternative A would involve substantial fixed costs but relatively low variable costs: fixed costs would be $315,000 per year, and variable costs would be $600 per boat. Subcontracting would involve a cost per boat of $2,580, and expansion would require an annual fixed cost of $58,000 and a variable cost of $1,040 per boat. a. Find the range of output for each alternative that would yield the lowest total cost. (Leave no cells blank be certain to enter "0" wherever required. Round your answers to the nearest whole number.) A B C or to OA OB OC to more b. Which alternative would yield the lowest total cost for an expected annual volume of 90 boats? c. What other factors might be considered in choosing between expansion…
A company that produces pleasure boats has decided to expand one of its lines. Current facilities are insufficient to handle the increased workload, so the company is considering three alternatives, A (new location), B (subcontract), and C (expand existing facilities).Alternative A would involve substantial fixed costs but relatively low variable costs: fixed costs would be $260,000 per year, and variable costs would be $610 per boat. Subcontracting would involve a cost per boat of $2,570, and expansion would require an annual fixed cost of $61,000 and a variable cost of $1,090 per boat.
A company that produces pleasure boats has decided to expand one of its lines. Current facilities are insufficient to handle the increased workload, so the company is considering three alternatives, A (new location), B (subcontract), and C (expand existing facilities). Alternative A would involve substantial fixed costs but relatively low variable costs: fixed costs would be $250,000 per year, and variable costs would be $500 per boat. Subcontracting would involve a cost per boat of $2,500, and expansion would require an annual fixed cost of $50,000 and a variable cost of $1,000 per boat. a. Find the range of output for each alternative that would yield the lowest total cost. (Leave no cells blank - be certain to enter "0" wherever required. Round your answers to the nearest whole number. Do not include the indifference point in your answer.) A B C → OA OB OC or to to more b. Which alternative would yield the lowest total cost for an expected annual volume of 150 boats? C. What other…
Problem 8-4 (Algo) A company that produces pleasure boats has decided to expand one of its lines. Current facilities are insufficient to handle the increased workload, so the company is considering three alternatives, A (new location), B (subcontract), and C (expand existing facilities). Alternative A would involve substantial fixed costs but relatively low variable costs: fixed costs would be $285,000 per year, and variable costs would be $570 per boat. Subcontracting would involve a cost per boat of $2,570, and expansion would require an annual fixed cost of $59,000 and a variable cost of $1,040 per boat. a. Find the range of output for each alternative that would yield the lowest total cost. (Leave no cells blank - be certain to enter "0" wherever required. Round your answers to the nearest whole number.) A B с Answer is not complete. or to to more b. Which alternative would yield the lowest total cost for an expected annual volume of 70 boats? C. What other factors might be…
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Peggy Lane Corp., a producer of machine tools, wants to move to a larger site. Two alternative locations have been identified: Bonham and McKinney Bonham would have fixed costs of $780,000 per year and variable costs of $15,000 per standard unit produced McKinney would have annual fixed costs of $920,000 and variable costs of $13,800 per standard unit. The finished items sell for $30,000 each. a) The volume of output at which both the locations have the same profit = standard units (round your response to the nearest whole number). b) Based on the analysis of the volume, after rounding the numbers to the nearest whole number, Bonham is superior below c) Based on the analysis of the volume, after rounding the numbers to the nearest whole number, McKinney is superior above d) The break-even point for Bonham is The break-even point for McKinney is units. (Enter your response rounded to the nearest whole number) units. (Enter your response rounded to the nearest whole number) standard…
Location A would result in annual fixed costs of $300,000 and variable costs of $55 per unit. Annual fixed costs at Location B are $600,000 with variable costs of $32 per unit. Sales volume is estimated to be 30,000 units per year. Which location has the lower cost at this volume? How large is its cost advantage? At what volume are the two facilities equal in cost?
The piece of land available is situated on the main road through the area and has great views of MountKinabalu on one side and the valley below on the other side. As the strategic advisor you have been asked to come up with a recommendation whether to develop a 4-star or 5-star property. Due to the fact that the area is near a World Heritage site and due to building height restrictions the total number of rooms for a 4-star hotel would be 300 rooms, whilst for a 5-star property the number of rooms would be 190. Identify at least THREE (3) strengths and weaknesses each and at least TWO (2) opportunities and threats each for the proposed hotel/resort at that area. (Not for Mount Kinabalu as a tourist attraction!)
Problem 03 Complying with all, government housing regulations and requirements, the employees union of a certain firm has the option to purchase either of two sites, each having an area of 18 hectares (180,000 sq.m.) of undeveloped land. The first singly owned, would cost Php20.00 a sq.m, but would needa roadway system, including the access road, 4,000 meters long, at a cost of Php 110.00 per meter. Additional development expenses would be Php 60,000 to subdivide and grade into 320 house löts, and another Php 32,000 for a hollow block fence and security gates. The second site consists of three lots, separately owned, with a total area of 18 hectares: 7 hectares at Php 25.00 a sq.m. 5 hectares at Php 21.00 a sq.m and 6 hectares at Php 14.00 a sq.m. The road system for this would be only 3,200 meters long at Php 100.00 per meter, but needs two box culverts each costing Php 25.000.00. Lot grading would be Php 35,000; fencing and security 8atës Phip 24,000. Assuming that all…