A Manufacturing Firm Is Considering Two Locations for a Plant

question 10

Multiple Choice

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: What would the total annual costs be for the Phoenix location with an annual output of 10,000 units?

• A)$280,000
• B)$140,000
• C)$220,000
• D)$300,000
• E)$156,000

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Definitions:

COGS

COGS, or Cost of Goods Sold, represents the direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Payables Turnover Rate

An efficiency ratio that measures how quickly a company pays off its suppliers, calculated as cost of goods sold divided by average accounts payable.

Accounts Payable Balance

The total amount of short-term liabilities or obligations a company owes to its creditors or suppliers.

Sales

The total revenue generated from goods or services sold by a company during a specific period.