West Calder Fabrication is trying to decide in which of the following three cities to locate a new production facility, and has gathered the following information about each: City Annual Fixed Cost Variable Cost (per unit) Singapore $30,000 $2 Hong Kong $20,000 $3 Niagara Falls $10,000 $6 a. If this facility will produce 5,000 units annually, where should West Calder locate it? b. What is the point of indifference between Singapore and Hong Kong? c. Over what range of production levels would West Calder Fabrication prefer to be in Niagara Falls?
West Calder Fabrication is trying to decide in which of the following three cities to locate a new production facility, and has gathered the following information about each: City Annual Fixed Cost Variable Cost (per unit) Singapore $30,000 $2 Hong Kong $20,000 $3 Niagara Falls $10,000 $6 a. If this facility will produce 5,000 units annually, where should West Calder locate it? b. What is the point of indifference between Singapore and Hong Kong? c. Over what range of production levels would West Calder Fabrication prefer to be in Niagara Falls?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:West Calder Fabrication is trying to decide in which of the following three cities to
locate a new production facility, and has gathered the following information about
each:
City
Annual Fixed Cost
Variable Cost (per unit)
Singapore
$30,000
$2
Hong Kong
$20,000
$3
Niagara Falls
$10,000
$6
a. If this facility will produce 5,000 units annually, where should West Calder locate
it?
b. What is the point of indifference between Singapore and Hong Kong?
c. Over what range of production levels would West Calder Fabrication prefer to be
in Niagara Falls?
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