A Manufacturing Firm Is Considering Two Locations for a Plant

question 53

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: $$\begin{array} { l c c } \text { Location } & F C \text { (annual) } & \text { VC (per unit) } \\\hline \text { Atlanta } & \$ 80,000 & \$ 20 \\\text { Phoenix } & \$ 140,000 & \$ 16\end{array}$$
If the annual demand will be 20,000 units, what would be the cost advantage of the better location?

• A) $20,000
• B) $460,000
• C) $480,000
• D) $80,000
• E) $60,000

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Definitions:

Median

The middle value in a sorted, ascending or descending, list of numbers.

Mean

The average value of a set of numbers, calculated by dividing the sum of all the values by the count of the values.

Observations

Records or measurements of variables or phenomena of interest, collected during an experiment or study.

Sample

A selection from a broader population designed for the process of collecting data, through either observation or questioning, to generate statistical insights about that population.