Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Two alternative locations have been identified:
Bonham:
fixed costs of $820,000
variable costs of $15,000
Mckinney:
fixed costs of $920,000
variable costs of $13,900
1) Bonham= 820,000 + 15,000*x
Mckinney= 920,000 + 13,900*x
820,000 + 15,000x= 920,000 + 13,900x
1,100x= 100,000
x= 91 units
2) Break-even point= fixed costs/ contribution margin
Bonham:
Break-even point= 820,000/(28,000 - 15,000)= 63 units
Mckinney:
Break-even point= 920,000/(28,000 - 13,900)= 65 units
