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 there alternatives, N (new location), S (subcontract), E (expand existing facilities). Alternative N would involve substantial fixed costs but relatively low variable costs: fixed costs would be $250,000 per year (for the new facility), and variable costs would be $500 per boat. a. Find the range of output for each alternative that would yield the lowest total cost.
A or more
B to
C to

b. Which alternative would yield the lowest total cost for an expected annual volume of 150 boats?

A

B

C