Esmail Mohebbi, owner of European Ignitions Manufacturing, needs to expand his capacity. He is considering three locationsAthens,

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Esmail Mohebbi, owner of European Ignitions Manufacturing, needs to expand his capacity. He is considering three locations—Athens, Brussels, and Lisbon—for a new plant. The company wishes to find the most economical location for an expected volume of 2,000 units per year.

APPROACH c Mohebbi conducts locational cost–volume analysis. To do so, he determines that fixed costs per year at the sites are $30,000, $60,000, and $110,000, respectively; and variable costs are $75 per unit, $45 per unit, and $25 per unit, respectively. The expected selling price of each ignition system produced is $120.

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