The Skulls, a Student Social Organization, Has Two Different Locations

question 28

Multiple Choice

The Skulls, a student social organization, has two different locations under consideration for constructing a new chapter house. The Skulls' president, a POM student, estimates that due to differing land costs, utility rates, etc., both fixed and variable costs would be different for each of the proposed sites, as follows: $\begin{array}{lcl}\text { Location } & \begin{array}{r}\text { Annual } \\\text { Fixed }\end{array} & \text { Variable } \\\hline \text { Alpha Ave. } & \$ 5,000 & \$ 200 \text { per person } \\\text { Beta Blvd. } & \$ 8,000 & \$ 150 \text { per person }\end{array}$ If it is estimated that 30 persons will be living in this new chapter house, what would be the Skulls' annual cost savings by selecting the less costly location, rather than the more costly?

• A) $0
• B) $1,500
• C) $200
• D) $150
• E) $350

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