Question

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:

Location FC (annual) VC (per unit)
Atlanta $ 80,000 $ 20
Phoenix $ 140,000 $ 16

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

Answer 1

Answer:

the total annual costs be for the Phoenix location with an annual output of 10,000 units is (D) $300,000

Explanation:

Annual Costs for phoenix=Variable Cost+Fixed

Costs=16.1*10,000+140,000=161,000+140,000=$301,000

 Closest answer is $300,000 . So, that is correct .