A Manufacturing Firm Is Considering Two Locations for a Plant

question 72

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

Journal Entry

A basic record documenting a business transaction in an accounting system, used to transfer information to financial statements.

Bank Balance

The amount of money held in a bank account at a particular time, as recorded by the bank.

NSF Check

Stands for Non-Sufficient Funds Check, a check that cannot be processed due to insufficient funds in the account it was drawn on.

Adjusting Entry

Journal entries made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.