Location a Would Result in Annual Fixed Costs of $300,000

question 60

Essay

Location A would result in annual fixed costs of $300,000 and variable costs of $55 per unit. Annual fixed costs at Location B are $600,000 with variable costs of $32 per unit. Sales volume is estimated to be 30,000 units per year. Which location has the lower cost at this volume? How large is its cost advantage? At what volume are the two facilities equal in cost?

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Definitions:

Analytical Type

An individual who prefers to use logic and reasoning in their thinking process, often effective in problem-solving and data analysis.

Extroverted Director

A leadership style characterized by outgoing, socially confident, and assertive behaviors in managing and directing others.

Innovative Thinker

Someone who introduces new ideas or methods and thinks outside the traditional pathways.

Intuitive

Having the ability to understand or know something immediately based on feelings rather than facts.