Break-Even Analysis8. Two alternative locations are under consideration for a newplant: Jackson, Mississippi, and Dayton, Ohio. The Jacksonlocation is superior in terms of costs. However, managementbelieves that sales volume would decline if this locationwere chosen because it is farther from the market, and thefirm's customers prefer local suppliers. The selling price ofthe product is $325 per unit in either case. Use the followinginformation to determine which location yields the highertotal profit per year:AnnualFixed CostLocationJackson $2,050,000Dayton$2,500,000Variable Costper Unit$75$95ForecastDemand per Year27,500 units35,000 units

Production is the process in which inputs are combined to have the required output. It includes a…

Answered: the product is $325 per unit in either…

the product is $325 per unit in either case. Use the following information to determine which location yields the higher total profit per year:

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

Break-Even Analysis
8. Two alternative locations are under consideration for a new
plant: Jackson, Mississippi, and Dayton, Ohio. The Jackson
location is superior in terms of costs. However, management
believes that sales volume would decline if this location
were chosen because it is farther from the market, and the
firm's customers prefer local suppliers. The selling price of
the product is $325 per unit in either case. Use the following
information to determine which location yields the higher
total profit per year:
Annual
Fixed Cost
Location
Jackson $2,050,000
Dayton
$2,500,000
Variable Cost
per Unit
$75
$95
Forecast
Demand per Year
27,500 units
35,000 units

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