Submit Quiz s Question: 1 pt 3 of 9 This Quiz: 9 pts possibl ter Billington Ster

Question

Submit Quiz s Question: 1 pt 3 of 9 This Quiz: 9 pts possibl ter Billington Stereo, Inc., supplies car radios to auto manufacturers and is going to open a new plant. The company is undecided between Detroit and Dallas as the e. The fixed costs in Dallas are lower due to cheaper land costs, but the variable costs in Dallas are higher because shipping distances would increase. Fixed costs Variable costs Dallas $560,000 $30/radio Detroit $840,000 $22/radio Based on the analysis of the volume, after rounding the numbers to the nearest whole number, Dallas is best below and Detroit is best above V radios Dallas's fixed costshaver creased by 10%. Based on the analysis of the volume, after rounding the numbers to the nearest whole number Dallas is best below and etroit is best above radios

Explanation / Answer

TC(Dallas) = 560,000 + 30x

TC(Detroit) = 840,000 + 22x

For analyzing we equate both equations,

560000 + 30x = 840000 + 22x

8X = 280,000

X = 35000.

Hence ,Dallas is beat below and Detroit is best above 35000 radios.

2. After 10% increase in Dallas,

TC(Dallas) = 616,000 + 30x

TC(Detroit) = 840,000 + 22x

Again equating,

616,000 + 30x = 840000 + 22x

8x = 28000 radios.

Hence, Dallas is best below and Detroit is best above 28000 radios.

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