A newly formed firm must decide on a plant location. There are two alternatives under consideration: locate near the major raw materials or locate near the major customers. Locating near the raw materials will result in lower fixed and variable costs compared to locating near the market, but the owners believe there would be a loss in sales volume because customers tend to favor local suppliers. Revenue per unit will be $176 in either case. Omaha $ 1.1 $ 26 9,700 Annual fixed costs ($ millions) Variable cost per unit Expected annual demand (units) Kansas City $ 1.2 41 10,300 $ Click here for the Excel Data File Using the above information, determine which location would produce the greater profit would produce the greater gross profit of
A newly formed firm must decide on a plant location. There are two alternatives under consideration: locate near the major raw materials or locate near the major customers. Locating near the raw materials will result in lower fixed and variable costs compared to locating near the market, but the owners believe there would be a loss in sales volume because customers tend to favor local suppliers. Revenue per unit will be $176 in either case. Omaha $ 1.1 $ 26 9,700 Annual fixed costs ($ millions) Variable cost per unit Expected annual demand (units) Kansas City $ 1.2 41 10,300 $ Click here for the Excel Data File Using the above information, determine which location would produce the greater profit would produce the greater gross profit of
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Problem 8-1 (Algo)
A newly formed firm must decide on a plant location. There are two alternatives under consideration: locate near the major raw
materials or locate near the major customers. Locating near the raw materials will result in lower fixed and variable costs compared to
locating near the market, but the owners believe there would be a loss in sales volume because customers tend to favor local
suppliers. Revenue per unit will be $176 in either case.
Omaha
$ 1.1
Kansas City
$1.2
$
26
$ 41
9,700
10,300
Annual fixed costs ($ millions)
Variable cost per unit
Expected annual demand (units)
Click here for the Excel Data File
Using the above information, determine which location would produce the greater profit
would produce the greater gross profit of
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