Question: The fixed and variable costs for three potential manufacturing plant sites for a rattan chair weaver are shown: Site Fixed Cost Per Year Variable Cost

The fixed and variable costs for three potential manufacturing plant sites for a rattan chair weaver are shown:

Site

Fixed Cost Per Year

Variable Cost per Unit

1

$600

$10.00

2

$1,100

$5.00

3

$2,200

$ 3.00

a) After rounding to the nearest whole number, site 1 is best below

550

0

100

units.

After rounding to the nearest whole number, site 2 is best between

550

100

0

and

0

100

550

units.

After rounding to the nearest whole number, site 3 is best above

100

0

550

units.

b) If the demand is

540

units, then the best location for the potential manufacturing plant is

SITE 3

SITE 1

SITE 2

.

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