A newly formed firm must decide on a plant location. There are two alternatives under consideration:...

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Answer: Omaha will produce a greater gross profit of $ 262,500.

Explanation:

	Omaha	Kansas
annual fixed cost	Â Â Â Â Â Â Â Â Â 1,200,000	Â Â Â Â Â 1,300,000
variable cost per unit	Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 27	Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 42
expected annual demand	Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 9,750	Â Â Â Â Â Â Â Â Â Â 10,350
revenue per unit	Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 177	Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 177
profit per unit= revenue-variable cost	Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 150	Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 135
Total annual profit= expected demand*profit per unit	Â Â Â Â Â Â Â Â Â 1,462,500	Â Â Â Â Â 1,397,250
expected monetary value= total annual profit-annual fixed cost	Â Â Â Â Â Â Â Â Â Â Â Â 262,500	Â Â Â Â Â Â Â Â Â Â 97,250

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