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A firm is trying to decide between two location alternatives, Albany and Baltimore. Albany would result in annual fixed costs of \$60,000, labor costs of \$7 per unit, material costs of \$10 per unit, transportation costs of \$15 per unit, and revenue per unit of \$50. Baltimore would have annual fixed costs of \$80,000, labor costs of \$6 per unit, material costs of \$9 per unit, transportation costs of \$14 per unit, and revenue per unit of \$48.

(A) At an annual volume of 9,000, which would yield the higher profit?
____________________________________
(B) At what annual volume would management be indifferent between the two alternatives in terms of annual profits? __________________________

#### Solution Preview

(A)

Albany

Variable cost = \$32
Revenue = \$50
CM per Unit = \$18

at 9000 units total CM = 18X9000 = ...

#### Solution Summary

The expert examines business accounting and operations management.

\$2.19