Alternative would yield higher profit for annual demand

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Reference no: EM13760838

A manager must decide between two location alternatives, Boston and Chicago. Boston would have annual fixed costs of $70,000, transportation costs of $60 per unit, and labor and material costs of $200 per unit. Chicago would have annual fixed costs of $90,000, transportation costs of $40 per unit, and labor and material costs of $170 per unit. Revenue will be $300 per unit.

A) Which alternative would yield the higher profit for an annual demand of 3,000 units?

B) Would the two locations yield the same profit at a certain volume? If so, at what volume would that be?

Reference no: EM13760838

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