Chapter 8 Homework

.xlsx

School

University of Wisconsin, Stout *

*We aren’t endorsed by this school

Course

200

Subject

Industrial Engineering

Date

Dec 6, 2023

Type

xlsx

Pages

4

Uploaded by nadiareese1

P = D x (R - VC) - FC Profit of Omaha = 8,000 x (185 - 36) - 1,200,000 Profit of Kansas City = 12,000 x (185 - 47) - 1,400,000 Kansas City would produce the greater gross profit A newly formed firm must decide on a plant location. There are two alternatives under consider-ation: 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 suppli-ers. Revenue per unit will be $185 in either case. Using the following information, determine which location would produce the greater profit.
a. At what volume of output would the two locations have the same total cost? Indifference point = ($920,000 - $800,000) / ($14,000 - $13,000) b. For what range of output would location A be superior? For what range would B be superior? Not sure how to solve for this A small producer of machine tools wants to move to a larger building, and has identified two alter-natives. Location A has annual fixed costs of $800,000 and variable costs of $14,000 per unit; loca-tion B has annual fixed costs of $920,000 and variable costs of $13,000 per unit. The finished items sell for $17,000 each. Indifference point = 120 units
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
  • Access to all documents
  • Unlimited textbook solutions
  • 24/7 expert homework help