Demonstrate to the OM manager how to go about choosing the best location using the numerical example you designed above.

icon
Related questions
Question

ABC Ltd. Wants to choose the best location for its new aluminum plant. The manager of
productions and operations has three possible locations to choose from. His assistant
recommends that he use break-even analysis location technique to help determine which
location is best based on costs.
 

. If total fixed cost = 40000

     AVC = 20

     Price per unit = 10

     Break even point = 40000 / 20 - 10= 4000

     So at the 4000 units of production, there will be no profit and loss as the total revenue is equal to the total cost.

Demonstrate to the OM manager how to go about choosing the best location using the
numerical example you designed above.

Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer