TABLE FIXED AND VARIABLE COSTS FOR MILE-HIGH LEMONADE Community Fixed Costs per Year Varlable Costs per Barrel Aurora $1,600,000 $17.00 Boulder $2,000,000 $12.00 Colorado Springs $1,500,000 $16.00 Denver $3,000,000 $10.00 Englewood $1,800,000 $15.00 Fort Collins $1,200,000 $15.00 Golden $1,700,000 $14.00
The operations manager for Mile-High Lemonade narrowed the search for a new facility location to seven communities. Annual fixed costs (land, property taxes, insurance, equipment, and buildings) and variable costs (labor, materials, transportation, and variable overhead) are shown in Table.
a. Which of the communities can be eliminated from further consideration because they are dominated (both variable and fixed costs are higher) by another community?
b. Plot the total cost
c. Using break-even analysis, calculate the break-even quantities to determine the range over which each community provides the lowest cost.
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