Answer:
Locations Same Total Cost at output = 120
Location A superior (less TC) than Location B (more TC) at output = 100
Location B superior (less TC) than Location A (more TC) at output = 150
Explanation:
Total Fixed Cost = Total Fixed Cost + Total Variable Cost
Location A :
Total Cost A = 800000 + 14000x
Location B :
Total Cost B = 920000 + 13000x
a. Two Locations have same Total Cost at output :
TC (A) = TC (B)
800000 + 14000x = 920000 + 13000x
920000 - 800000 = 14000x - 13000x
120000 = 1000x
x = 120000 / 1000 → = 120
b. Location A would be superior if : TC (A) < TC (B)
Hit & Trial method ; taking x = 100
[800000 + 14000 (100) = 220000] < [920000 + 13000 (100) = 2220000]
Location B would be superior if : TC (B) < TC (A)
Hit & Trial method ; taking x = 150
800000 + 14000 (150) = 2900000] > [920000 + 13000 (150) = 2870000]
