Asmall producer of machine tools wants to move to a larger building, and has identified two alternatives. location a has annual fixed costs of $100,000 and variable costs of $13,000 per unit; location b has annual fixed costs of $300,000 and variable costs of $8,000 per unit. the finished items sell for $18,000 each. at what volume of output would the two locations have the same total cost?

The two location will have the same total cost for a volume of 40 items.

Explanation:

The cost function C for the alternatives in terms of the variable cost V and the fixed cost F,  being x the selling items, can be expressed as:

C = F +V.x

Thus for the alternatives A and B the corresponding cost function Ca and Cb will be:

Ca = Fa + Va.x

Cb = Fb + Vb.x

Replacing the fixed and variables values for eahc alternatives:

Ca = 100,000 + 13,000x

Cb = 300,000 + 8,000x

By equalling the cost:

Ca = Cb

100,000 + 13,000*x = 300,000 + 8,000*x

13,000x -8,000x = 300,000 - 100,000

5,000x = 200,000  

x = 200,000 / 5,000 = 40

The cost functions will be equal for a 40 volume of items.

what are the options

explanation:

forbearance of student loan payments. under forbearance, your loan payments are postponed (or reduced) but interest continues to accrue during the period of forbearance. if you don't pay the interest during that period, the interest may be “capitalized,” which means it is added to your principal balance.