A producer of a machine tool wants to move to a larger building and has identified 2 places. Location A has annual fixed costs of $800 thousand and variable costs of $14 thousand per unit; location B has annual fixed costs of $920 thousand and variable costs of $13 thousand per unit. The finished items sell for $17 thousand each.
At what volume of output would the two locations have the same total cost?
For what range of output would location A be superior? For what range would B be superior?