A Manufacturing Firm Is Considering Two Locations for a Plant

question 50

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: $$\begin{array} { l c c } \text { Location } & \mathrm { FC } \text { (annual) } & \mathrm { VC } \text { (per unit) } \\\hline \text { Atlanta } & \$ 80,000 & \$ 20 \\\text { Phoenix } & \$ 140,000 & \$ 16\end{array}$$ If annual demand is estimated to be 20,000 units, which location should the company select?

• A) Atlanta
• B) Phoenix
• C) either Atlanta or Phoenix
• D) reject both Atlanta and Phoenix
• E) build at both locations

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