A small producer of machine tools wants to move to a larger building, and has identified two alternatives. Location A has annual fixed costs of $800,000 and variable costs of $14,000 per unit;
location B has annual fixed costs of $920,000 and variable costs of $13,000 per unit. The finished
items sell for each.
a. At what volume of output would the two locations have the same total cost?
b. For what range of output would location A be superior? For what range would B be superior?