East Texas Seasonings Is Preparing to Build One Processing Center

question 98

Essay

East Texas Seasonings is preparing to build one processing center to serve its four sources of seasonings. The four source locations are at coordinates shown below. Also, the volume from each source is provided.
(a) Calculate the volume-weighted center of gravity.
(b) Calculate the simple center of gravity (all cities weighted equally).
(c) Explain why the two calculations differ.

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Definitions:

At-Risk

The at-risk rules limit the amount of loss a taxpayer can claim to the amount actually at risk in the investment activity.

Form 6198

An IRS form used by taxpayers to determine the amount of at-risk activities loss that is deductible for the tax year.

At-Risk Amounts

At-Risk Amounts refer to the amount of money an individual could lose in an investment or venture, indicating the level of risk involved in the investment.

At-Risk Amount

The maximum amount of money or other assets that a taxpayer can claim as a deduction or loss from an activity, to the extent of the actual economic risk.