If Annual Demand Is Estimated to Be 20,000 Units, Which

question 35

Multiple Choice

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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Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision.

Product Cost

The total expense involved in creating a product, including direct materials, direct labor, and manufacturing overhead.

Variable Cost

Expenses that vary directly with the amount of output or the scale of operations.

Product Costs

The costs directly associated with the production of goods or services, including raw materials, labor, and manufacturing overhead.