Problem 8-1 (Static) 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 $185 in either case. Omaha Annual fixed costs ($ millions) Variable cost per unit Expected annual demand (units) Click here for the Excel Data File: $ $ 1.2 36 8,000 would produce the greater gross profit of Kansas City $ $ 1.4 47 12,000 Using the above information, determine which location would produce the greater profit.

Problem 8-1 (Static) 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 $185 in either case. Omaha Annual fixed costs ($ millions) Variable cost per unit Expected annual demand (units) Click here for the Excel Data File: $ $ 1.2 36 8,000 would produce the greater gross profit of Kansas City $ $ 1.4 47 12,000 Using the above information, determine which location would produce the greater profit.

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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