Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

A newly formed firm must decide on a plant location. There are two alternatives under consideration: locate near the major raw materials or locate near

image text in transcribed
image text in transcribed
image text in transcribed
A newly formed firm must decide on a plant location. There are two alternatives under consideration: 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 belleve there would be a loss in sales volume because customers tend to favor local suppliers. Revenue per unit will be $177 in either case. Click here for the Excel Data File Using the above information, determine which location would produce the greater profit. The owner of Genulne Subs, Inc., hopes to expand the present operation by adding one new outlet. She fias studied three locations. Each would have the same labor and materials costs (lood, serving containers, nopkins, etc) of $2,90 per sandwich. Sandwiches sell for $3.70 each in all locations. Rent and equipment costs would be $5,900 per month for location A,$5,950 per month for location 8 , and $6,200 per month for location C. a. Determine the volume necessary at each location to realize a monthly profit of $12,500. (Do not round intermediate calculations. Round your answer to the nearest whole number.) b-1. If expected sales at A, B, and C are 23,500 per month, 26,500 per month, and 25,500 per month, respectively, calculate the profit of the each locations? b-2. Which location would yieid the greatest profits? Locotion A Location C Location B

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started