The Skulls, a student social organization, has two different locations under consideration for constructing a new chapter house. The Skulls' president, a POM student, estimates that due to differing land costs, utility rates, etc., both fixed and variable costs would be different for each of the proposed sites, as follows: $$\begin{array} { l c c }
\text { Location } & \text { Annual Fixed } & \text { Variable } \
\hline \text { Alpha Ave. } & \$ 5,000 & \$ 200 \text { perperson } \
\text { Beta Blvd. } & \$ 8,000 & \$ 150 \text { perperson }
\end{array}$$ If it is estimated that 30 persons will be living in this new chapter house, which location should the Skulls select?
A) Alpha AvE.
B) Beta Blvd.
C) either Alpha Ave. or Beta Blvd.
D) reject both Alpha Ave. and Beta Blvd.
E) become a virtual organization.

Question

The Skulls, a student social organization, has two different locations under consideration for constructing a new chapter house. The Skulls' president, a POM student, estimates that due to differing land costs, utility rates, etc., both fixed and variable costs would be different for each of the proposed sites, as follows: $$\begin{array} { l c c } 
\text { Location } & \text { Annual Fixed } & \text { Variable } \
\hline \text { Alpha Ave. } & \$ 5,000 & \$ 200 \text { perperson } \
\text { Beta Blvd. } & \$ 8,000 & \$ 150 \text { perperson }
\end{array}$$ If it is estimated that 30 persons will be living in this new chapter house, which location should the Skulls select?
A) Alpha AvE.
B) Beta Blvd.
C) either Alpha Ave. or Beta Blvd.
D) reject both Alpha Ave. and Beta Blvd.
E) become a virtual organization.

Quizplus · Accepted Answer

The total cost for Alpha Ave. is $5,000 + ($200 * 30) = $11,000. The total cost for Beta Blvd. is $8,000 + ($150 * 30) = $12,500. Alpha Ave. has the lower total cost.

The Skulls, a Student Social Organization, Has Two Different Locations