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SABER'S LOCATION DECISION
Saber Ltd is a small manufacturer of guitar strings. The lease on its current factory is coming to an end and it is considering two possible locations for a new factory. The finance director of Saber has produced the following financial information on each site:
1. Using the data in the table construct fully labelled break-even charts for site A and site B. Indicate the break-even output and the margin of safety on each chart.
2. Using the data in the table calculate the following for site A and site B:
a. the break-even level of output
b. the margin of safety
c. the profit if the maximum capacity is sold.
3. On the basis of the calculations you have made, explain which location Saber should choose.
4. Outline two other factors Saber Ltd might take into account when making its location decision.
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