A Manufacturing Company Is Considering Two Alternative Locations for a New

question 31

Essay

A manufacturing company is considering two alternative locations for a new facility. The fixed and variable costs for the two locations are found in the table below. For which volume of business would the two locations be equally attractive? If the company plans on producing 6,950 units, which location would be more attractive?
$$\begin{array} { | l | l | r | } \hline & \text { West } & \text { East } \\\hline \text { Fixed cost } & 137500 & 162300 \\\hline \text { Variable cost } & 17.5 & 14.3 \\\hline\end{array}$$

---

Definitions:

Common Stockholders

Individuals or entities that own shares of common stock in a corporation, giving them rights to dividends and voting in shareholder meetings.

Limited Partners

Investors in a partnership who are not involved in day-to-day operations and whose liability is limited to the amount of their investment.

Capital Budgeting

The method of analyzing and choosing long-term investment opportunities that align with the objective of maximizing shareholder wealth.

Investment Opportunities

Potential investments that a company or individual could make to earn a return.