The Owner of a Millwork Shop Is Considering Three Alternative

question 32

Essay

The owner of a millwork shop is considering three alternative locations for a new plant for building embossed-and-clad steel exterior doors for residences. Fixed and variable costs follow. Since the plant ships nationwide, revenue is assumed the same regardless of plant location. Plot the total cost lines in the chart provided below, and identify the range over which each location is best.

---

Definitions:

Revenues Recognized

Income that a company has earned during a period but which is recorded in the financial statements according to accounting principles.

Proprietary Fund Types

Funds used by a government to account for activities similar to those found in the private sector, where the determination of net income is necessary or useful.

Fund Financial Statements

Financial reports specifically prepared to show the financial position and results of operations for governmental funds and non-profit organizations.

Special Revenue Fund

A fund used by governments to account for revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects.