(Heizer & Render): Hugh Leacher Corp. a producer of machine tools, wants to move a large site. Two alternative locations have been identified: Ooltewah and South Pittsburg. Ooltewah would have a fixed cost of $800,000 per year and variable costs of $14,000 per standard unit produced. South Pittsburg would have annual fixed costs of $920,000 and variable cost of $13,000 per standard unit. The finished items sell for $29,000 each:
a) At what volume of output would the two locations have the same profit? Show both calculations and plot. Develop the plot using MSExcel.
b) For what range of output would Ooltewah be superior (have higher profits)?
c) For what range would South Pittsburg be superior?
d) What is the relevance of break-even points for these cities? Recommendation: