Measured by annual fixed plus variable costs of production

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Reference no: EM131801643

Hyundai Motors is considering three siteslong dash—?A, ?B, and Clong dash—at which to locate a factory to build its? new-model automobile, the Hyundai Sport C150. The goal is to locate at a? minimum-cost site, where cost is measured by the annual fixed plus variable costs of production. Hyundai Motors has gathered the following? data: Site Annualized Fixed Cost Variable Cost per Auto

Produced Upper A $12,000,000 $2,600

Upper B $22,000,000 $1,900

Upper C $25,000,000 $1,000

The firm knows it will produce between 0 and? 60,000 Sport C150s at the new plant each? year, but, thus? far, that is the extent of its knowledge about production plans.

?a) The value of? volume, V, of production above which site Upper C is recommended? = nothing Sport C150s ?(round your response up to the next whole? number). ?

b) The value of? volume, V, of production below which site Upper AA is recommended? = nothing Sport C150s ?(round your response up to the next whole? number). ?

c) Over what range of volume is site Upper B ?optimal? A. Site Upper B is optimal for volumes from 14,286 Sport C150s. B. Site Upper B is optimal for volumes above 14,286 Sport C150s. C. Site Upper B is always optimal because its cost line is always below that of A and C for all volume levels.

d) Site Upper B is never optimal because its cost line always exceeds that of A or C for all volume levels

Reference no: EM131801643

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