Brian plans to charge the same amount for tuition regardless of where he decides to establish his school. If he believes that 700 students will matriculate each year, which site will result in the lowest total cost?
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Brian Trump has obtained fixed- and variable-cost information for four potential sites for his professional wrestling school and summarized it in tabular form below. All values are in dollars.
| Site | Fixed Cost | Variable Cost |
| A | 10,000 | 24 |
| B | 12,000 | 20 |
| C | 14,000 | 18 |
| D | 16,000 | 17 |
Brian plans to charge the same amount for tuition regardless of where he decides to establish his school. If he believes that 700 students will matriculate each year, which site will result in the lowest total cost?
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- ABC Ltd. Wants to choose the best location for its new aluminum plant. The manager ofproductions and operations has three possible locations to choose from. His assistantrecommends that he use break-even analysis location technique to help determine whichlocation is best based on costs. Assuming: Total fixed cost = 80,000 Price per unit= 20 AVC (Average variable cost) = 40 Break-even point= Total fixed cost / (AVC-Price per unit) Break-even point = 80,000/ (40-20) Break-even point = 4,000 1) Demonstrate to the OM manager how to go about choosing the best location using thenumerical example designed above.Peter Billington Stereo, Inc., supplies car radios to auto manufacturers and is going to open a new plant. The company is undecided between Detroit and Dallas as the site. The fixed costs in Dallas are lower due to cheaper land costs, but the variable costs in Dallas are higher because shipping distances would increase. Dallas Detroit $600,000 $30/radio Fixed costs $780,000 Variable costs $22/radio a) Based on the analysis of the volume, after rounding the numbers to the nearest whole number, Dallas is best below and Detroit is best above radios. 27,000 97,497 22,500 74,996A small firm produces and sells novelty items in a five-barangay area. The firm expects to consolidate assembly of its greeting cards line at a single location. Currently, operations are in three widely scattered locations. The leading candidate for location will have a monthly fixed cost of Php42, 000 and variable costs of Php3 per card. Cards sell for Php7 each. Prepare a table that shows total profits, fixed costs, variable costs, and revenues for monthly volumes of 10,000, 12,000, and 15,000 units. What is the break-even point?
- Dobb's Ltd Wants to choose the best location for its new aluminum plant. The manager ofproductions and operations has three possible locations to choose from. His assistantrecommends that he use break-even analysis location technique to help determine whichlocation is best based on costs. Assuming: Total fixed cost = 80,000 Price per unit= 20 AVC (Average variable cost) = 40 Break-even point= Total fixed cost / (AVC-Price per unit) Break-even point = 80,000/ (40-20) Break-even point = 4,000 1) Demonstrate to the OM manager using graph how to go about choosing the best location using thenumerical example designed above.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!)Peter Billington Stereo, Inc., supplies car radios to auto manufacturers and is going to open a new plant. The company is undecided between Detroit and Dallas as the site. The fixed costs in Dallas are lower due to cheaper land costs, but the variable costs in Dallas are higher because shipping distances would increase. Dallas $600,000 $27/radio Detroit $840,000 $21/radio a) Based on the analysis of the volume, after rounding the numbers to the nearest whole number, Dallas is best below and Detroit is best above 40,000 b) Dallas's fixed costs have increased by 10%. Based on the analysis of the volume, after rounding the numbers to the nearest whole number, Dallas is best below and Detroit is best above Fixed costs Variable costs radios radios
- 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?Location Fixed Cost Variable Cost A $100,000 $10 B $150,000 $7 C $200,000 $5 600 Annual 500 Cost ($000) 400 300 200 100 2 4 6 8 10 14 16 18 20 Q (000s of units) i. Plot the total cost curves in the chart provided above and identify the range over which each location would be best. ii. Use break-even analysis to calculate exactly the break-even quantity that defines each range.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…
- Cost analysis. A farm implements dealer is seeking a fourth warehouse location to complement three existing warehouses. There are three potential locations: Charlotte, NC; Atlanta, GA; and Columbia, SC. Charlotte would involve a fixed cost of $4,000 per month and a variable cost of $4 per unit; Atlanta would involve a fixed cost of $3,500 per month and a variable cost of $5 per unit; and Columbia would involve a fixed cost of $5,000 per month and a variable cost of $6 per unit. Use of the Charlotte location would increase system transportation costs by $19,000 per month, Atlanta by $22,000 per month, and Columbia by $18,000 per month. Which location would result in the lowest total cost to handle 800 units per month?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…ABC Ltd. Wants to choose the best location for its new aluminum plant. The manager ofproductions and operations has three possible locations to choose from. His assistantrecommends that he use break-even analysis location technique to help determine whichlocation is best based on costs. . If total fixed cost = 40000 AVC = 20 Price per unit = 10 Break even point = 40000 / 20 - 10= 4000 So at the 4000 units of production, there will be no profit and loss as the total revenue is equal to the total cost. Demonstrate to the OM manager how to go about choosing the best location using thenumerical example you designed above.
