MJMPM,LLC is currently evaluating three options for their graphite golf club shaft production operation: small job shop; large job shop and repetitive focus manufacturing. The Small shop has a fixed cost of $3,000 /month and produces at a total variable cost of $10 per shaft. The Large job shop has fixed costs of $12,000/month and Variable Costs of $2 per unit. The Repetitive Focus option has fixed costs of $50,000 and variable costs total $1 per unit.
1. At what Volume does the large job shop become less expensive than the small job shop?
2. Which of the 3 options offers the lowest cost at a volume of 40,000 units? (show the cost of all three options)