C&A must decide among three location alternatives: Austin, Boston and Chicago. A
ID: 429282 • Letter: C
Question
C&A must decide among three location alternatives: Austin, Boston and Chicago. Austin has annual fixed costs of 100,000, transportation costs of $100 per unit, and labor and material costs of $150 per unit. Boston has annual fixed costs of $150,000, transportation costs of $100 per unit, and labor and material costs of $100 per unit. Chicago has annual fixed costs of $300,000, transportation costs of $100 per unit, and labor and material costs of $200 per unit. At what level of demand should C&A locate in Boston?
Less than 1000
Less than 1333
Between 1000 to 1500
Greater than 1000
Boston is not an option
Less than 1000
Less than 1333
Between 1000 to 1500
Greater than 1000
Boston is not an option
Explanation / Answer
Answer:-
In that, I assume some semand order for these three locations:-
In that we see, at any level of order chicago location is higest for that cost charges, in between Austin and bostan, at the demand of 1000 units, both location cost charges are equal, so in that we see in table, if we order less that 1000 units Austin location is good for us, but we order more that 1000 units and less than 1500, then bostan location is good for us.
1000 to 1500 units for bostan location
Austin Particular cost Unit 1000 Unit 1250 unit 1100 Unit 1500 labour & material cost $150 $150,000 $187,500 $165,000 $225,000 Transportation cost $100 $100,000 $125,000 $110,000 $150,000 total variable cost $250 $250,000 $312,500 $275,000 $375,000 Fixed cost $100,000 $100,000 $100,000 $100,000 Total cost $350,000 $412,500 $375,000 $475,000Related Questions
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