A Firm Is Considering Two Location Alternatives

question 78

Multiple Choice

A firm is considering two location alternatives.At location A,fixed costs would be $4,000,000 per year,and variable costs $0.30 per unit.At alternative B,fixed costs would be $3,600,000 per year,with variable costs of $0.35 per unit.If annual demand is expected to be 10 million units,which plant offers the lowest total cost?

• A)Plant A,because it is cheaper than Plant B for all volumes over 8,000,000 units.
• B)Plant B,because it is cheaper than Plant A for all volumes over 8,000,000 units.
• C)Plant A,because it is cheaper than Plant B for all volumes.
• D)Plant B,because it has the lower variable cost per unit.
• E)Neither Plant A nor Plant B,because the crossover point is at 10 million units.

Understand the relationship between psychological factors and physical health, including stress and somatic symptoms.

Identify and describe various psychophysiological disorders and their symptoms.

Recognize the impact of lifestyle, personality, and social factors on physical health and illness.

Understand behavioral and psychological interventions for managing and treating psychophysiological disorders.

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Definitions:

Variable Costs

Costs that vary in direct proportion to the level of production or sales volume, like raw materials and direct labor.

Fixed Costs

Costs that do not vary with the level of production or sales over a specified period, such as rent or salaries.

Operating Income

The profit realized from a business's operations after subtracting operating expenses from gross profits.

Contribution Margin

The residual amount from sales income post the subtraction of variable costs, signifying its role in offsetting fixed expenses and creating profit.