Two alternative locations are under consideration for a new plant: Jackson, Mississippi, and Dayton, Ohio. The Jackson location is superior in terms of costs. However, management believes that sales volume would decline if this location were chosen because it is farther from the market, and the firm?s customers prefer local suppliers. The selling price of the product is $250 per unit in either case.

Use the following information to determine which location yields the higher total profit per year:

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Location Annual Fixed Costs Jackson $1,500,000 Dayton $2,800,000 Variable Costs per Unit $50 $85 Forecast Demand per Year 30,000 units 40,000 units Location Annual Fixed Costs Jackson $1,500,000 Dayton $2,800,000 Variable Costs per Unit $50 $85 Forecast Demand per Year 30,000 units 40,000 units

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Jackson or Dayton locations Jackson 25... View the full answer