A stereo company supplier car radios to auto manufacturers and is going to open a new plant. The company is undecided between Serendah and Seremban as the site. The fixed costs for Serendah are lower due to cheaper land costs, but the variable costs are higher because shipping distances would increase. Given the following costs: i. ii. iii. Cost Fixed Variable Serendah RM600,000 RM28/radio Seremban RM800,000 RM22/radio Graph the total-cost lines for all the sites. Over what range of volume is each location the preferable one? For a volume of 20,000 units, which site is the best?

A stereo company supplier car radios to auto manufacturers and is going to open a new plant. The company is undecided between Serendah and Seremban as the site. The fixed costs for Serendah are lower due to cheaper land costs, but the variable costs are higher because shipping distances would increase. Given the following costs: i. ii. iii. Cost Fixed Variable Serendah RM600,000 RM28/radio Seremban RM800,000 RM22/radio Graph the total-cost lines for all the sites. Over what range of volume is each location the preferable one? For a volume of 20,000 units, which site is the best?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section10.A: Mutually Exclusive Investments Having Unequal Lives

Problem 3P

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