Question: Your company is considering expanding into the Sun Belt. Your industry is heavily dependent on water transportation, so the preliminary research has narrowed the location to three sites near port facilities in Memphis, New Orleans, and St. Louis. On the basis of the following data, which site is preferable? Show your computations.
| Relevant Factors |
Memphis |
New Orleans |
St. Louis |
| Variable cost per unit |
$1.80 |
$2.00 |
$1.95 |
| fixed cost/year |
$150,000 |
$300,000 |
$400,000 |
| price per unit |
$3.00 |
$3.00 |
$3.00 |
| volume (units/year) |
300,000 |
250,000 |
325,000 |