A Manufacturing Firm Is Considering Two Locations for a Plant

question 1

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: $$\begin{array} { l c c } \text { Location } & \mathrm { FC } \text { (annual) } & \mathrm { VC } \text { (per unit) } \\\hline \text { Atlanta } & \$ 80,000 & \$ 20 \\\text { Phoenix } & \$ 140,000 & \$ 16\end{array}$$ 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:

Fill Orders

The process by which companies prepare and deliver products or services as requested by customers in purchase orders.

External Failure Cost

Costs incurred when products fail to meet quality standards after being delivered to the customer, including returns, repairs, and warranties.

Quality Cost Report

A document or set of data analyzing the costs associated with ensuring the quality of products or services, including prevention, appraisal, and failure costs.

External Failure Cost

Costs incurred when a product fails to meet quality standards after being delivered to customers, including returns, repairs, and warranty claims.