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Unformatted text preview: They have estimated the following parameters for each location. For what unit sales volume should they choose each location? Location Fixed Cost Variable Cost Waco, Texas 35,000 6 Tijuana, Mexico 90,000 3 Podunk, Arkansas 20,000 7 Step 1: (2 points) Quantity at Indifference point between Podunk and Waco= |35000-20000|/|7-6| =15000 Indifference point between Waco and Tijuana= |90000-35000|/|6-3|=18333.33 Indifference point between Podunk and Tijuana= |90000-20000|/|7-3|=17500 Step 2: draw the total cost graph for each location (2 points) Step 3: identify the range for each location (2 points) If the quantity range is between 1 to 15000, choose Podunk; if it is between 15000 and 18333.33, choose Waco; if it is more than 18333.33, choose Tijuana....
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This note was uploaded on 10/17/2011 for the course MNGT 368 taught by Professor Curthurds during the Spring '08 term at Nicholls State.
- Spring '08