Fall-Line, Inc.: is a Great Falls, Montana, manufacturer of a variety of downhil

Question

Fall-Line, Inc.: is a Great Falls, Montana, manufacturer of a variety of downhill skis. Fall-Line is considering four locations for a new plant: Aspen, Colorado; Medicine Lodge, Kansas; Broken Bow, Nebraska; and Wounded Knee, South Dakota. Although Aspen's fixed and variable costs are dominated by those of the other communities, Fall-Line believes that both the demand and the price would be higher for skis made in Aspen than for skis made in the other locations. The following table shows those projections along with the annual fixed costs and variable costs per pair of skis for each location: What break-even quantity defines each location? The break-even quantity for Aspen is pairs;

Explanation / Answer

break even point= fixed cost/contribution per unit

contribution per unit =sale price per unit- variable cost per unit

break even

units

particulars sale per unit varible cost per unit fixed cost contribution

break even

units

aspen 500 250 8,000,000 250 32000 medicine lodge 350 130 2,400,000 220 10,909 broken bow 350 90 3,400,000 260 13,077 wounded knee 350 65 4,500,000 285 15,790

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