3.2 A firm that has recently experienced an enormous growth rate is seeking to l

Question

3.2

A firm that has recently experienced an enormous growth rate is seeking to lease a small plant in Memphis, TN; Biloxi, MS; or Birmingham, AL. Prepare an economic analysis of the three locations given the following information: Annual costs for building, equipment, and administration would be $50,000 for Memphis, $60,000 for Biloxi, and $100,000 for Birmingham. Labor and materials are expected to be $8 per unit in Memphis, $4 per unit in Biloxi, and $5 per unit in Birmingham. The Memphis location would increase system transportation costs by $50,000 per year, the Biloxi location by $60,000 per year, and the Birmingham location by $28,000 per year. Expected annual volume is 11,200 units.(Omit the "$" sign in your response.)

A firm that has recently experienced an enormous growth rate is seeking to lease a small plant in Memphis, TN; Biloxi, MS; or Birmingham, AL. Prepare an economic analysis of the three locations given the following information: Annual costs for building, equipment, and administration would be $50,000 for Memphis, $60,000 for Biloxi, and $100,000 for Birmingham. Labor and materials are expected to be $8 per unit in Memphis, $4 per unit in Biloxi, and $5 per unit in Birmingham. The Memphis location would increase system transportation costs by $50,000 per year, the Biloxi location by $60,000 per year, and the Birmingham location by $28,000 per year. Expected annual volume is 11,200 units.(Omit the "$" sign in your response.)

Explanation / Answer

Building, Equip, Admin (a) Labour & material/unit Total Labour & material cost (b)(=unit cost * annual volume) System Transportation (c ) Total Cost ($) (=a+b+c) Memphis, TN;                           50,000                               8                                                             89,600      50,000 1,89,600 Biloxi, MS                           60,000                               4                                                             44,800      60,000 1,64,800 Birmingham, AL                       1,00,000                               5                                                             56,000      28,000 1,84,000 Annual Volume (units)                    11,200

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