Question

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 $46,000 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 $20,800 per year. Expected annual volume is 12,200 units. Need total cost for Memphis; total cost for Biloxi; and total cost for Birmingham

Answer 1

It is convenient to use a spreadsheet to record the numbers and do the math. The cost for labor an materials per unit needs to be multiplied by the number of units, and the sum of individual costs must be computed to find the total cost. The total costs are ...

Total cost for Memphis: $193,600

Total cost for Biloxi: $168,800

Total cost for Birmingham: $181,800