An Operations Manager Has Narrowed Down the Search for a New

question 116

Multiple Choice

An operations manager has narrowed down the search for a new plant for McIntosh Enterprises to three locations.Fixed and variable costs follow: Plot the total cost curves in the chart provided and identify the range over which each location would be best.Then use break-even analysis to calculate exactly the break-even quantity that defines each range. Which of the following statements is correct?

• A)Location C is the best one if volumes are quite low.
• B)Location A becomes the most expensive place to produce at volumes less than 10,000.
• C)The break-even quantity between A and B is less than or equal to 17,000 units.
• D)The break-even quantity between C and B is more than 30,000 units.

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Definitions:

Sales Taxes Payable

A liability account that represents the amount of sales tax collected from customers by a business, which is owed to the government.

Adjusting Entry

A journal entry made in the accounting records at the end of an accounting period to allocate income and expenses to the correct periods.

Unearned Revenue

Money received by a company for a service or product that has yet to be delivered or provided.

Deferred Revenue

Income received by a company for goods or services yet to be delivered or performed, recorded as a liability on the balance sheet until the goods or services are provided.