A manufacturing firm is considering two locations for a plant to produce a new product. The two locations have fixed and variable costs as follows: $$\begin{array} { l r l }
\text { Location } & \mathrm { FC } \text { (annual) } & \mathrm { VC } \text { (per unit) } \
\hline \text { Atlanta } & \$ 80,000 & \$ 20 \
\text { Phoenix } & \$ 140,000 & \$ 16
\end{array}$$ If the annual demand will be 20,000 units, what would be the cost advantage of the better location?
A) $20,000
B) $460,000
C) $480,000
D) $80,000
E) $60,000

Question

A manufacturing firm is considering two locations for a plant to produce a new product. The two locations have fixed and variable costs as follows: $$\begin{array} { l r l } 
\text { Location } & \mathrm { FC } \text { (annual) } & \mathrm { VC } \text { (per unit) } \
\hline \text { Atlanta } & \$ 80,000 & \$ 20 \
\text { Phoenix } & \$ 140,000 & \$ 16
\end{array}$$ If the annual demand will be 20,000 units, what would be the cost advantage of the better location?
A) $20,000
B) $460,000
C) $480,000
D) $80,000
E) $60,000

Quizplus · Accepted Answer

The Answer of A manufacturing firm is considering two locations for a plant to produce a new product. The two locations have fixed and variable costs as follows: $$\begin{array} { l r l } 
\text { Location } & \mathrm { FC } \text { (annual) } & \mathrm { VC } \text { (per unit) } \
\hline \text { Atlanta } & \$ 80,000 & \$ 20 \
\text { Phoenix } & \$ 140,000 & \$ 16
\end{array}$$ If the annual demand will be 20,000 units, what would be the cost advantage of the better location?
A) $20,000
B) $460,000
C) $480,000
D) $80,000
E) $60,000

A Manufacturing Firm Is Considering Two Locations for a Plant