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Volume and Range of Outputs

Hugh Leach 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 $730,000 per year and variable costs of $16,000 per standard unit produced. McKinney would have annual fixed costs of $850,000 and variable costs of $12,000 per standard unit. The finished items sell for $31,000 each.

(A) At what volume of output would the two locations have the same profit?
____________ units

(B) Round your answer to the nearest whole number; for example, 123 .
For what range of output would Bonham be superior (have higher profits)?
__________ ____________ units

(C) Round your answer to the nearest whole number; for example, 123 .
For what range would McKinney be superior?

__________ ____________ units
Round your answer to the nearest whole number; for example, 123 .

Solution Summary

This solution provides calculations for volume of output and range of output.

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