The Operations Manager Has Narrowed Down the Search for a New

Multiple Choice

The operations manager has narrowed down the search for a new plant to three locations. Fixed and variable costs follow:
$\begin{array} { | l | l | l | } \hline \text { Location } & \begin{array} { l } \text { Fixed Cost } \\\text { per Year }\end{array} & \begin{array} { l } \text { Variable Cost } \\\text { per Unit }\end{array} \\\hline \mathrm { A } & \$ 75,000 & \$ 31 \\\mathrm {~B} & 250,000 & 12 \\\mathrm { C } & 300,000 & 15 \\\hline\end{array}$
Plot the total cost curves in the chart provided below, and identify the range over which each location would be best. Then use break- even analysis to calculate exactly the break- even quantity that defines each range.
$\begin{array}{l}\text { Anmul }\\\begin{array} { c } \text { Cost } \\( \$ 000 ) \end{array}\end{array}$
Which of the following statements is correct?

A) The break- even quantity between A and B is less than or equal to 9170 units.
B) Location C is the best one if volumes are quite low.
C) The break- even quantity between A and B is more than 9170 units but less than 9270 units.
D) The break- even quantity between B and C is less than or equal to 6000 units.