Question
Three location alternatives are being considered for the production of hair products. Details are presented below. Location Yearly Fixed Cost Variable Cost Location A $60,000
Three location alternatives are being considered for the production of hair products. Details are presented below.
Location | Yearly Fixed Cost | Variable Cost |
Location A | $60,000 | $6 per unit |
Location B | $50,000 | $10 per unit |
Location C | $40,000 | $12 per unit |
a. If the expected output is 6000 units per year, which location would provide the lowest total cost?
b. Identify the range of output for each location alternative that would yield the lowest cost
(i). Confirm answer via computation
(ii). Display answer graphically
Suppose revenue per unit is $20. Which location alternative is superior (using profit analysis) based on a demand of 15000 units?
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