Profit analysis. A manufacturer of staplers is about to lose its lease, so it must move to another location. Two sites are currently under consideration. Fixed costs would be $8,000 per month at site A and $9,400 per month at site B. Variable costs are expected to be $5 per unit at site A and $4 per unit at site B. Monthly demand has been steady at 8,800 units for the last several years and is not expected to deviate from that amount in the foreseeable future. Assume staplers sell for $6 per unit. Determine which location would yield the higher profit under these conditions.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
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Profit analysis. A manufacturer of staplers is about to lose its lease, so it must move to another location. Two sites are currently under consideration. Fixed costs would be $8,000 per month at site A and $9,400 per month at site B. Variable costs are expected to be $5 per unit at site A and $4 per unit at site B. Monthly demand has been steady at 8,800 units for the last several years and is not expected to deviate from that amount in the foreseeable future. Assume staplers sell for $6 per unit. Determine which location would yield the higher profit under these conditions.

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