Excel Products is planning a new warehouse to serve the Southeast. Locations A, B, and C are under consideration. Fixed and variable costs follow.
Plot the total cost curves in the chart provided and identify the range over which each location would be best. Then use break-even analysis as necessary to calculate exactly the break-even quantity that defines each range.
Which of the following statements is correct?
◦ The total cost of location A, if the volume is 250,000 units, is over $7,000,000.
◦ Location B is best over all volume levels.
◦ Location A is the best one if volumes are quite high.
◦ The break-even quantity between A and B is more than 75,000 units but fewer than 200,000 units.