The monthly volume at each location. Introduction: Location is where a firm chooses to site its operations. Location decisions can large effects on expenses and incomes. Location choices are normally quite imperative to both substantial and private companies. The area choice directly affects an operation's expenses and also its capacity to serve clients.

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Answer 1

Question

Chapter 8, Problem 2P

a)

Summary Introduction

To determine: The monthly volume at each location.

Introduction: Location is where a firm chooses to site its operations. Location decisions can large effects on expenses and incomes. Location choices are normally quite imperative to both substantial and private companies. The area choice directly affects an operation's expenses and also its capacity to serve clients.

a)

Expert Solution

Answer to Problem 2P

The monthly volume of location A is 16,853.93 units, location B is 17,415.73 units and location C is 17,752.81 units.

Explanation of Solution

Given Information:

It is given that the labor and material costs are $1.76 per sandwich, the cost of sandwich is $2.65. The rent and equipment cost for Location A is$5,000, Location B is $5,500 and Location C is $5,800. The realized monthly profit is $10,000

Calculate the monthly volume at each location

It is calculated by adding realized profit with fixed costs and dividing the result with rate per unit subtracted by variable costs.

Monthly Volume(Q)LocationA=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,000)($2.65−$1.76)]=[$15,000$0.89]=16,853.93 units

Monthly Volume(Q)LocationB=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,500)($2.65−$1.76)]=[$15,500$0.89]=17,415.73 units

Monthly Volume(Q)LocationC=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,800)($2.65−$1.76)]=[$15,800$0.89]=17,752.81 units

Hence, the monthly volume of location A is 16,853.93 units, location B is 17,415.73 units and location C is 17,752.81 units.

b)

Summary Introduction

To determine: The location that yield with greatest profits.

Introduction: Location is where a firm chooses to site its operations. Location decisions can large effects on expenses and incomes. Location choices are normally quite imperative to both substantial and private companies. The area choice directly affects an operation's expenses and also its capacity to serve clients.

b)

Expert Solution

Answer to Problem 2P

“Location C” yields greatest profits.

Explanation of Solution

Given Information:

It is given that the labor and material costs are $1.76 per sandwich, the cost of sandwich is $2.65. The rent and equipment cost for Location A is $5,000, Location B is $5,500 and Location C is $5,800. The expected sales for Location A are $21,000, Location B is $22,000 and Location C is $23,000.

Calculate the location that yield with greatest profits.

It is calculated by subtracting the rate per unit with variable costs and multiplying the result with expected sales and subtracting the whole with the fixed costs.

Expected ProfitLocation A=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($21,000×($2.65−$1.76))−$5,000]=[($21,000×$0.89)−$5,000]=[$18,690−$5,000]

=$13,690

Expected ProfitLocation B=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($22,000×($2.65−$1.76))−$5,500]=[($22,000×$0.89)−$5,500]=[$19,580−$5,500]

=$14,080

Expected ProfitLocation C=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($23,000×($2.65−$1.76))−$5,800]=[($23,000×$0.89)−$5,800]=[$20,470−$5,800]

=$14,670

Hence, location C yields greatest profits.

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Students have asked these similar questions

A firm that has recently experienced enormous growth is seeking to lease a small plant in Memphis,TN; Biloxi, MS; or Birmingham, AL. Prepare an economic analysis of the three locations given thefollowing information: Annual costs for building, equipment, and administration would be $40,000for Memphis, $60,000 for Biloxi, and $100,000 for Birmingham. Labor and materials are expected tobe $8 per unit in Memphis, $4 per unit in Biloxi, and $5 per unit in Birmingham. The Memphis location would increase system transportation costs by $50,000 per year, the Biloxi location by $60,000per year, and the Birmingham location by $25,000 per year. Expected annual volume is 10,000 units.

A firm that recently experienced an enormous growth rate is seeking to lease a small plant in Memphis, TN; Biloxi MS; or Birmingham, AL. Prepare an economic analysis of the three locations giving the following information. Annual costs for building, equipment, and administration would be $64,000 for Memphis, $74,000 for Biloxi, and $109,000 for Birmingham. Labor and materials are expected to be $7 per unit in Memphis, $6 per unit in Biloxi, and $6 per unit in Birmingham. The Memphis location would increase system transportation costs by $63,000 per year, the Biloxi location by $73,500 per year, and the Birmingham location by $25,900 per year. Expected annual volume is 14,900 units. Total Cost Memphis _______________ Biloxi _______________ Birmingham _________________

A firm that has recently experienced an enormous growth rate is seeking to lease a small plant in Memphis, TN; Biloxi, MS; or Birmingham, AL. Prepare an economic analysis of the three locations given the following information: Annual costs for building, equipment, and administration would be $40,000 for Memphis, $60,000 for Biloxi, and $100,000 for Birmingham. Labor and materials are expected to be $8 per unit in Memphis, $4 per unit in Biloxi, and $5 per unit in Birmingham. The Memphis location would increase system transportation costs by $50,000 per year, the Biloxi location by $60,000 per year, and the Birmingham location by $25,000 per year. Expected annual volume is 10,000 units.

Answer 2

Question

Chapter 8, Problem 2P

a)

Summary Introduction

To determine: The monthly volume at each location.

Introduction: Location is where a firm chooses to site its operations. Location decisions can large effects on expenses and incomes. Location choices are normally quite imperative to both substantial and private companies. The area choice directly affects an operation's expenses and also its capacity to serve clients.

a)

Expert Solution

Answer to Problem 2P

The monthly volume of location A is 16,853.93 units, location B is 17,415.73 units and location C is 17,752.81 units.

Explanation of Solution

Given Information:

It is given that the labor and material costs are $1.76 per sandwich, the cost of sandwich is $2.65. The rent and equipment cost for Location A is$5,000, Location B is $5,500 and Location C is $5,800. The realized monthly profit is $10,000

Calculate the monthly volume at each location

It is calculated by adding realized profit with fixed costs and dividing the result with rate per unit subtracted by variable costs.

Monthly Volume(Q)LocationA=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,000)($2.65−$1.76)]=[$15,000$0.89]=16,853.93 units

Monthly Volume(Q)LocationB=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,500)($2.65−$1.76)]=[$15,500$0.89]=17,415.73 units

Monthly Volume(Q)LocationC=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,800)($2.65−$1.76)]=[$15,800$0.89]=17,752.81 units

Hence, the monthly volume of location A is 16,853.93 units, location B is 17,415.73 units and location C is 17,752.81 units.

b)

Summary Introduction

To determine: The location that yield with greatest profits.

Introduction: Location is where a firm chooses to site its operations. Location decisions can large effects on expenses and incomes. Location choices are normally quite imperative to both substantial and private companies. The area choice directly affects an operation's expenses and also its capacity to serve clients.

b)

Expert Solution

Answer to Problem 2P

“Location C” yields greatest profits.

Explanation of Solution

Given Information:

It is given that the labor and material costs are $1.76 per sandwich, the cost of sandwich is $2.65. The rent and equipment cost for Location A is $5,000, Location B is $5,500 and Location C is $5,800. The expected sales for Location A are $21,000, Location B is $22,000 and Location C is $23,000.

Calculate the location that yield with greatest profits.

It is calculated by subtracting the rate per unit with variable costs and multiplying the result with expected sales and subtracting the whole with the fixed costs.

Expected ProfitLocation A=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($21,000×($2.65−$1.76))−$5,000]=[($21,000×$0.89)−$5,000]=[$18,690−$5,000]

=$13,690

Expected ProfitLocation B=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($22,000×($2.65−$1.76))−$5,500]=[($22,000×$0.89)−$5,500]=[$19,580−$5,500]

=$14,080

Expected ProfitLocation C=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($23,000×($2.65−$1.76))−$5,800]=[($23,000×$0.89)−$5,800]=[$20,470−$5,800]

=$14,670

Hence, location C yields greatest profits.

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Answer 3

Question

Chapter 8, Problem 2P

a)

Summary Introduction

To determine: The monthly volume at each location.

Introduction: Location is where a firm chooses to site its operations. Location decisions can large effects on expenses and incomes. Location choices are normally quite imperative to both substantial and private companies. The area choice directly affects an operation's expenses and also its capacity to serve clients.

a)

Expert Solution

Answer to Problem 2P

The monthly volume of location A is 16,853.93 units, location B is 17,415.73 units and location C is 17,752.81 units.

Explanation of Solution

Given Information:

It is given that the labor and material costs are $1.76 per sandwich, the cost of sandwich is $2.65. The rent and equipment cost for Location A is$5,000, Location B is $5,500 and Location C is $5,800. The realized monthly profit is $10,000

Calculate the monthly volume at each location

It is calculated by adding realized profit with fixed costs and dividing the result with rate per unit subtracted by variable costs.

Monthly Volume(Q)LocationA=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,000)($2.65−$1.76)]=[$15,000$0.89]=16,853.93 units

Monthly Volume(Q)LocationB=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,500)($2.65−$1.76)]=[$15,500$0.89]=17,415.73 units

Monthly Volume(Q)LocationC=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,800)($2.65−$1.76)]=[$15,800$0.89]=17,752.81 units

Hence, the monthly volume of location A is 16,853.93 units, location B is 17,415.73 units and location C is 17,752.81 units.

b)

Summary Introduction

To determine: The location that yield with greatest profits.

Introduction: Location is where a firm chooses to site its operations. Location decisions can large effects on expenses and incomes. Location choices are normally quite imperative to both substantial and private companies. The area choice directly affects an operation's expenses and also its capacity to serve clients.

b)

Expert Solution

Answer to Problem 2P

“Location C” yields greatest profits.

Explanation of Solution

Given Information:

It is given that the labor and material costs are $1.76 per sandwich, the cost of sandwich is $2.65. The rent and equipment cost for Location A is $5,000, Location B is $5,500 and Location C is $5,800. The expected sales for Location A are $21,000, Location B is $22,000 and Location C is $23,000.

Calculate the location that yield with greatest profits.

It is calculated by subtracting the rate per unit with variable costs and multiplying the result with expected sales and subtracting the whole with the fixed costs.

Expected ProfitLocation A=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($21,000×($2.65−$1.76))−$5,000]=[($21,000×$0.89)−$5,000]=[$18,690−$5,000]

=$13,690

Expected ProfitLocation B=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($22,000×($2.65−$1.76))−$5,500]=[($22,000×$0.89)−$5,500]=[$19,580−$5,500]

=$14,080

Expected ProfitLocation C=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($23,000×($2.65−$1.76))−$5,800]=[($23,000×$0.89)−$5,800]=[$20,470−$5,800]

=$14,670

Hence, location C yields greatest profits.

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Answer 4

Question

Chapter 8, Problem 2P

a)

Summary Introduction

To determine: The monthly volume at each location.

Introduction: Location is where a firm chooses to site its operations. Location decisions can large effects on expenses and incomes. Location choices are normally quite imperative to both substantial and private companies. The area choice directly affects an operation's expenses and also its capacity to serve clients.

a)

Expert Solution

Answer to Problem 2P

The monthly volume of location A is 16,853.93 units, location B is 17,415.73 units and location C is 17,752.81 units.

Explanation of Solution

Given Information:

It is given that the labor and material costs are $1.76 per sandwich, the cost of sandwich is $2.65. The rent and equipment cost for Location A is$5,000, Location B is $5,500 and Location C is $5,800. The realized monthly profit is $10,000

Calculate the monthly volume at each location

It is calculated by adding realized profit with fixed costs and dividing the result with rate per unit subtracted by variable costs.

Monthly Volume(Q)LocationA=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,000)($2.65−$1.76)]=[$15,000$0.89]=16,853.93 units

Monthly Volume(Q)LocationB=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,500)($2.65−$1.76)]=[$15,500$0.89]=17,415.73 units

Monthly Volume(Q)LocationC=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,800)($2.65−$1.76)]=[$15,800$0.89]=17,752.81 units

Hence, the monthly volume of location A is 16,853.93 units, location B is 17,415.73 units and location C is 17,752.81 units.

b)

Summary Introduction

To determine: The location that yield with greatest profits.

Introduction: Location is where a firm chooses to site its operations. Location decisions can large effects on expenses and incomes. Location choices are normally quite imperative to both substantial and private companies. The area choice directly affects an operation's expenses and also its capacity to serve clients.

b)

Expert Solution

Answer to Problem 2P

“Location C” yields greatest profits.

Explanation of Solution

Given Information:

It is given that the labor and material costs are $1.76 per sandwich, the cost of sandwich is $2.65. The rent and equipment cost for Location A is $5,000, Location B is $5,500 and Location C is $5,800. The expected sales for Location A are $21,000, Location B is $22,000 and Location C is $23,000.

Calculate the location that yield with greatest profits.

It is calculated by subtracting the rate per unit with variable costs and multiplying the result with expected sales and subtracting the whole with the fixed costs.

Expected ProfitLocation A=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($21,000×($2.65−$1.76))−$5,000]=[($21,000×$0.89)−$5,000]=[$18,690−$5,000]

=$13,690

Expected ProfitLocation B=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($22,000×($2.65−$1.76))−$5,500]=[($22,000×$0.89)−$5,500]=[$19,580−$5,500]

=$14,080

Expected ProfitLocation C=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($23,000×($2.65−$1.76))−$5,800]=[($23,000×$0.89)−$5,800]=[$20,470−$5,800]

=$14,670

Hence, location C yields greatest profits.

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Answer 5

Chapter 8, Problem 2P

a)

Summary Introduction

To determine: The monthly volume at each location.

Introduction: Location is where a firm chooses to site its operations. Location decisions can large effects on expenses and incomes. Location choices are normally quite imperative to both substantial and private companies. The area choice directly affects an operation's expenses and also its capacity to serve clients.

a)

Expert Solution

Answer to Problem 2P

The monthly volume of location A is 16,853.93 units, location B is 17,415.73 units and location C is 17,752.81 units.

Explanation of Solution

Given Information:

It is given that the labor and material costs are $1.76 per sandwich, the cost of sandwich is $2.65. The rent and equipment cost for Location A is$5,000, Location B is $5,500 and Location C is $5,800. The realized monthly profit is $10,000

Calculate the monthly volume at each location

It is calculated by adding realized profit with fixed costs and dividing the result with rate per unit subtracted by variable costs.

Monthly Volume(Q)LocationA=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,000)($2.65−$1.76)]=[$15,000$0.89]=16,853.93 units

Monthly Volume(Q)LocationB=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,500)($2.65−$1.76)]=[$15,500$0.89]=17,415.73 units

Monthly Volume(Q)LocationC=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,800)($2.65−$1.76)]=[$15,800$0.89]=17,752.81 units

Hence, the monthly volume of location A is 16,853.93 units, location B is 17,415.73 units and location C is 17,752.81 units.

b)

Summary Introduction

To determine: The location that yield with greatest profits.

Introduction: Location is where a firm chooses to site its operations. Location decisions can large effects on expenses and incomes. Location choices are normally quite imperative to both substantial and private companies. The area choice directly affects an operation's expenses and also its capacity to serve clients.

b)

Expert Solution

Answer to Problem 2P

“Location C” yields greatest profits.

Explanation of Solution

Given Information:

It is given that the labor and material costs are $1.76 per sandwich, the cost of sandwich is $2.65. The rent and equipment cost for Location A is $5,000, Location B is $5,500 and Location C is $5,800. The expected sales for Location A are $21,000, Location B is $22,000 and Location C is $23,000.

Calculate the location that yield with greatest profits.

It is calculated by subtracting the rate per unit with variable costs and multiplying the result with expected sales and subtracting the whole with the fixed costs.

Expected ProfitLocation A=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($21,000×($2.65−$1.76))−$5,000]=[($21,000×$0.89)−$5,000]=[$18,690−$5,000]

=$13,690

Expected ProfitLocation B=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($22,000×($2.65−$1.76))−$5,500]=[($22,000×$0.89)−$5,500]=[$19,580−$5,500]

=$14,080

Expected ProfitLocation C=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($23,000×($2.65−$1.76))−$5,800]=[($23,000×$0.89)−$5,800]=[$20,470−$5,800]

=$14,670

Hence, location C yields greatest profits.

Answer 6

Chapter 8, Problem 2P

a)

Summary Introduction

To determine: The monthly volume at each location.

Introduction: Location is where a firm chooses to site its operations. Location decisions can large effects on expenses and incomes. Location choices are normally quite imperative to both substantial and private companies. The area choice directly affects an operation's expenses and also its capacity to serve clients.

a)

Expert Solution

Answer to Problem 2P

The monthly volume of location A is 16,853.93 units, location B is 17,415.73 units and location C is 17,752.81 units.

Explanation of Solution

Given Information:

It is given that the labor and material costs are $1.76 per sandwich, the cost of sandwich is $2.65. The rent and equipment cost for Location A is$5,000, Location B is $5,500 and Location C is $5,800. The realized monthly profit is $10,000

Calculate the monthly volume at each location

It is calculated by adding realized profit with fixed costs and dividing the result with rate per unit subtracted by variable costs.

Monthly Volume(Q)LocationA=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,000)($2.65−$1.76)]=[$15,000$0.89]=16,853.93 units

Monthly Volume(Q)LocationB=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,500)($2.65−$1.76)]=[$15,500$0.89]=17,415.73 units

Monthly Volume(Q)LocationC=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,800)($2.65−$1.76)]=[$15,800$0.89]=17,752.81 units

Hence, the monthly volume of location A is 16,853.93 units, location B is 17,415.73 units and location C is 17,752.81 units.

Answer 7

Chapter 8, Problem 2P

a)

Summary Introduction

To determine: The monthly volume at each location.

Introduction: Location is where a firm chooses to site its operations. Location decisions can large effects on expenses and incomes. Location choices are normally quite imperative to both substantial and private companies. The area choice directly affects an operation's expenses and also its capacity to serve clients.

Answer 8

a)

Expert Solution

Answer to Problem 2P

The monthly volume of location A is 16,853.93 units, location B is 17,415.73 units and location C is 17,752.81 units.

Answer 9

a)

Expert Solution

Answer 10

a)

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Given Information:

It is given that the labor and material costs are $1.76 per sandwich, the cost of sandwich is $2.65. The rent and equipment cost for Location A is$5,000, Location B is $5,500 and Location C is $5,800. The realized monthly profit is $10,000

Calculate the monthly volume at each location

It is calculated by adding realized profit with fixed costs and dividing the result with rate per unit subtracted by variable costs.

Monthly Volume(Q)LocationA=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,000)($2.65−$1.76)]=[$15,000$0.89]=16,853.93 units

Monthly Volume(Q)LocationB=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,500)($2.65−$1.76)]=[$15,500$0.89]=17,415.73 units

Monthly Volume(Q)LocationC=[(Realized Profit+Fixed Costs)(Rate per unit−Variable Costs)]=[($10,000+$5,800)($2.65−$1.76)]=[$15,800$0.89]=17,752.81 units

Hence, the monthly volume of location A is 16,853.93 units, location B is 17,415.73 units and location C is 17,752.81 units.

Answer 13

b)

Summary Introduction

To determine: The location that yield with greatest profits.

Introduction: Location is where a firm chooses to site its operations. Location decisions can large effects on expenses and incomes. Location choices are normally quite imperative to both substantial and private companies. The area choice directly affects an operation's expenses and also its capacity to serve clients.

b)

Expert Solution

Answer to Problem 2P

“Location C” yields greatest profits.

Explanation of Solution

Given Information:

It is given that the labor and material costs are $1.76 per sandwich, the cost of sandwich is $2.65. The rent and equipment cost for Location A is $5,000, Location B is $5,500 and Location C is $5,800. The expected sales for Location A are $21,000, Location B is $22,000 and Location C is $23,000.

Calculate the location that yield with greatest profits.

It is calculated by subtracting the rate per unit with variable costs and multiplying the result with expected sales and subtracting the whole with the fixed costs.

Expected ProfitLocation A=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($21,000×($2.65−$1.76))−$5,000]=[($21,000×$0.89)−$5,000]=[$18,690−$5,000]

=$13,690

Expected ProfitLocation B=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($22,000×($2.65−$1.76))−$5,500]=[($22,000×$0.89)−$5,500]=[$19,580−$5,500]

=$14,080

Expected ProfitLocation C=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($23,000×($2.65−$1.76))−$5,800]=[($23,000×$0.89)−$5,800]=[$20,470−$5,800]

=$14,670

Hence, location C yields greatest profits.

Answer 14

b)

Summary Introduction

To determine: The location that yield with greatest profits.

Introduction: Location is where a firm chooses to site its operations. Location decisions can large effects on expenses and incomes. Location choices are normally quite imperative to both substantial and private companies. The area choice directly affects an operation's expenses and also its capacity to serve clients.

Answer 15

b)

Expert Solution

Answer to Problem 2P

“Location C” yields greatest profits.

Answer 16

b)

Expert Solution

Answer 17

b)

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

Given Information:

It is given that the labor and material costs are $1.76 per sandwich, the cost of sandwich is $2.65. The rent and equipment cost for Location A is $5,000, Location B is $5,500 and Location C is $5,800. The expected sales for Location A are $21,000, Location B is $22,000 and Location C is $23,000.

Calculate the location that yield with greatest profits.

It is calculated by subtracting the rate per unit with variable costs and multiplying the result with expected sales and subtracting the whole with the fixed costs.

Expected ProfitLocation A=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($21,000×($2.65−$1.76))−$5,000]=[($21,000×$0.89)−$5,000]=[$18,690−$5,000]

=$13,690

Expected ProfitLocation B=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($22,000×($2.65−$1.76))−$5,500]=[($22,000×$0.89)−$5,500]=[$19,580−$5,500]

=$14,080

Expected ProfitLocation C=[(Expected Sales×(Rate per unit−Variable Cost))−Fixed Costs]=[($23,000×($2.65−$1.76))−$5,800]=[($23,000×$0.89)−$5,800]=[$20,470−$5,800]

=$14,670

Hence, location C yields greatest profits.

Answer 20

Ch. 8.6 - Prob. 1RQ Ch. 8.6 - Prob. 2RQ Ch. 8 - Prob. 1DRQ Ch. 8 - Prob. 2DRQ Ch. 8 - Prob. 3DRQ Ch. 8 - Prob. 4DRQ Ch. 8 - Prob. 5DRQ Ch. 8 - Prob. 6DRQ Ch. 8 - Prob. 7DRQ Ch. 8 - Prob. 8DRQ

Solution Summary: The author calculates the monthly volume at each location by adding realized profit with fixed costs and dividing the result with rate per unit subtracted by variable costs.

Concept explainers

Answer to Problem 2P

Explanation of Solution

Answer to Problem 2P

Explanation of Solution

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Chapter 8 Solutions