e Excel to show formulas used  Amazing is evaluating three locations for a second headquarters. Costs for construction at location A are $18,900,000, Location B are $21,700,000 and Location C are $23,300,000.  Variable costs for Location A are $16, Location B are $14 and Location C are $12.  The company plans to sell products for $27. Create a cost-volume graph that shows cost lines for all three options through 2,000,000 unit

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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  • Use Excel to show formulas used 
  • Amazing is evaluating three locations for a second headquarters. Costs for construction at location A are $18,900,000, Location B are $21,700,000 and Location C are $23,300,000.  Variable costs for Location A are $16, Location B are $14 and Location C are $12.  The company plans to sell products for $27.
    1. Create a cost-volume graph that shows cost lines for all three options through 2,000,000 units. 
Expert Solution
Step 1

Break even point = Fixed costs / (sales price per unit – variable cost per unit)

· Location A

Break even point = 18900000/(27-16)

1,718,181.818 units = ~ 1,718,182 units

· Location B

Break even point =21700000/(27-14)

1,669,230.769 units = ~ 1,669,231 units

· Location C

Break even point =23300000/(27-12)

1,553,333.33 units = ~ 1,553,334 units

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