Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Question
The As-You-Like-It Hamburger Shop is considering adding a new location. The investment at each of the four potential sites is the same. The price they can charge for hamburgers is set by the competition in the area.
Given the information below, which site is expected to be the most profitable?
Factor |
Site A |
Site B |
Site C |
Site D |
Fixed Cost |
$10,000 |
$8,000 |
$6,000 |
$11,000 |
Variable Cost per Unit |
$ 0.70 |
$ 0.70 |
$ 0.85 |
$ 0.65 |
Price per Unit |
$ 1.30 |
$ 1.20 |
$ 1.25 |
$ 1.10 |
|
20,000 |
22,000 |
18,000 |
24,000 |
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