Answered: Fixed Costs Variable Manufacturing…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Question

Dennison Manufacturing makes large helical springs used in
aircraft landing gear. The company has narrowed its potential
choices for its new manufacturing facility to four cities. The
following information is known about the manufacturing and
shipping costs of locating in each of these four cities:

a. Use break-even point analysis to determine where Den-
nison should locate.
b. Based solely on break-even quantity, if Dennison’s manu-
facturing forecast for the foreseeable future is 40,000 units
annually, where should he locate?

Fixed Costs Variable Manufacturing Variable Shipping
Costs per Unit
per Year
Costs per Unit
Phoenix
$300,000
$70.00
$5.00
Buffalo
$600,000
$56.00
$4.00
Seattle $1,500,000
$36.00
$2.00
Atlanta $1,750,000
$42.00
$5.00

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