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1.3 Before the final location decision in favour of Gruenheide which is near Berlin, Germany, more than ten European countries had campaigned to have the factory located within their jurisdictions (Galeon, 2016). The Netherlands, France, Finland, Poland, Hungary, the Czech Republic were at various points considered as potential sites of the plant. Suppose that the final three locations considered by Tesla Inc. were Berlin (Germany), Prague (Czech Republic) and Vaasa (Finland). Assume that Tesla Inc. used the following data associated with the production of Model Y for the final locational analysis regarding the three locations: Location Berlin, Germany Prague, Czech Republic Vaasa, Finland Total fixed costs 30 million 8 million 14 million Direct material cost per unit 1 500 6 000 3 500 Direct labour cost per unit 7 000 3 000 6 000 Variable overhead per unit 1 800 4 000 2 500 A target capacity of 10 000 Vehicles (Model Y) per week is projected for the Gigafactory. Assume that the expected average selling price for a unit of the Tesla Model Y is 47 000.

1.3.2 On the basis of the data provided above, use a locational cost-volume analysis to determine the most suitable location for the Teslas European Gigafactory. As part of the analysis, plot the cost curve for each of the three locations on the same graph, determine the total cost for each location, and the expected profit for each location. For the plots, use units from 0 to 15 000 at intervals of 1 000. (8 Marks

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