Excel Products Is Planning a New Warehouse to Serve the Southeast.Locations

question 90

Multiple Choice

Excel Products is planning a new warehouse to serve the Southeast.Locations A,B,and C are under consideration.Fixed and variable costs follow: Plot the total cost curves in the chart provided below,and identify the range over which each location would be best.Then use break-even analysis as necessary to calculate exactly the break-even quantity that defines each range. Which of the following statements is correct?

• A)Location A is the best one if volumes are quite high.
• B)Location B is best over all volume levels.
• C)The total cost of location A,if the volume is 250,000 units,is over $7,000,000.
• D)The break-even quantity between A and B is more than 75,000 units but less than 200,000 units.

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Definitions:

Salvage Value

The estimation of an asset's value at the end of its period of utility.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, representing the wear and tear or obsolescence of the asset.

Service Life

The expected period during which an asset is considered useful and productive in a business operation, also known as useful life.

Units-Of-Production

A depreciation method that allocates the cost of an asset based on its usage, production, or units of output over its useful life.