A company that produces pleasure boats has decided to expand one of its lines. Current facilities are unsufficient to handle the increased workload, so the company is considering these alternatives A (new location), B (subcontract), and C (expand existing facilities).
Alternative A would involve substantial fixed costs but relatively low variable costs: fixed costs would be $250,000 per year, and variable costs would be $500 per boat. Subcontracting would involve a cost per boat of $2,500 and a fixed cost of $50,000, and expansion would require an annual fixed cost of $50,000 and a variable cost of $1,000 per boat.
a. Find the range of output for each alternative that would yield the lowest total cost. Round to the nearest whole number.