IBN from Taiwan plans to set up a new computer manufacturing plant in Europe. The costs would be the followin three possible locations. Location Variable cost/unit Yearly fixed costs Initial investment Lisbon € 19 € 1900 000 € 14 000 000 Paris € 21 € 1700 000 € 12 000 000 Rome € 20 € 1 500 000 € 10 000 000 a) Which place would be the most advantageous considering the costs in case of producing 100 000 units per ye

IBN from Taiwan plans to set up a new computer manufacturing plant in Europe. The costs would be the followin three possible locations. Location Variable cost/unit Yearly fixed costs Initial investment Lisbon € 19 € 1900 000 € 14 000 000 Paris € 21 € 1700 000 € 12 000 000 Rome € 20 € 1 500 000 € 10 000 000 a) Which place would be the most advantageous considering the costs in case of producing 100 000 units per ye

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Pricing

Pricing is used as a term in finance and economics, pricing is the process of fixing a value for a product or a service. Pricing establishes a value for a product or service that the customer has to pay. A business can choose from different strategies while deciding to set prices.

Question

IBN from Taiwan plans to set up a new computer manufacturing plant in Europe. The costs would be the followings at the
three possible locations.
Location
Variable
cost/unit
Yearly fixed
costs
Initial
investment
Lisbon
€ 19
€ 1900
000
€ 14 000
000
Paris
€ 21
€ 1700
000
€ 12 000
000
Rome
€ 20
€ 1 500
000
€ 10 000
000
a) Which place would be the most advantageous considering the costs in case of producing 100 000 units per year for 5
years?
b) At what yearly production volume would the costs be equal in Lisbon and Rome during the 5 years?

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