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Fall-Line Inc. is a Great Falls Montana manufacturer of a variety of downhill skis. Fall-Line is considering four locations for a new plant: Aspen Colorado; Medicine Lodge Kansas; Broken Bow Nebraska; and Wounded Knee South Dakota. Annual fixed costs and variable costs per pair of skis are shown in the attached table.a. Plot the total cost curves for all of the communities on a single graph. Identify on the graph the range in volume over which each location would be best.b. What break-even quantity defines each range?Although Aspen s fixed and variable costs are dominated by those of the other communities Fall-Line believes that both the demand and the price would be higher for skis made in Aspen than for skis made in the other locations. The attached table also shows those projections. c. Determine which location yields the highest total profit per year.d. Is this location decision sensitive to forecast accuracy? At what minimum sales volume does Aspen become the location of choice?
8000000
2502400000
1303400000
904500000
65500350350350Location
Annual Fixed Costs
Variable Cost per Pair
Aspen
Medicine Lodge
Broken Bow
Wounded Knee
Price per Pair
Forecast Demand per Year
60000 pairs
45000 pairs
43000 pairs
40000 pairs

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