Question content area

Part $1$

Peter Billington$$ Stereo, Inc., supplies car radios to auto manufacturers and is going to open a new plant. The company is undecided between Detroit and Dallas as the site. The fixed costs in Dallas are lower due to cheaper land$$ costs, but the variable costs in Dallas are higher because shipping distances would increase.

$$

Dallas

Detroit

Fixed costs

$ $640$ comma $000$

$ $780$ comma $000$

Variable costs

$ $27/$radio

$ $22/$radio

Part $2$

$$a$)$ Based on the analysis of the$$ volume, after rounding the numbers to the nearest whole$$ number, Dallas is best below and Detroit is best above

$$

$127,995$

$0$

$155,996$

$28,000$

$33,600$

radios.

Part $3$

$$b$)$ Dallas$\text{'}$s fixed costs have increased by$10\%.$ Based on the analysis of the$$ volume, after rounding the numbers to the nearest whole$$ number, Dallas is best below and Detroit is best above

$$

$18,240$

$15,200$

$28,000$

$12,800$

$140,795$

radios.