John Bros, owner of a spark plug manufacturing facility, is looking to expand hi

Question

John Bros, owner of a spark plug manufacturing facility, is looking to expand his production capacity. He is considering three locations A, B, and C for the constructing of a new plant. The company wishes to find the most economical location for an expected volume of 2500 units per year. Bros calculates that the fixed costs per year at each of the sites amount to $25,000; $50,000; and $100,000 respectively. The variable cost is $70 per unit, $40 per unit and $20 per unit respectively. The expecting selling price for each spark plug is $120. Find the preference volume for each location.

Explanation / Answer

option C since B and C have same cost but C has more profit per unit B and C get same unit 1250 and 1250 each

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