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: $$\begin{array} { l c c }
\text { Location } & \mathrm { FC } \text { (annual) } & \mathrm { VC } \text { (per unit) } \
\hline \text { Atlanta } & \$ 80,000 & \$ 20 \
\text { Phoenix } & \$ 140,000 & \$ 16
\end{array}$$ At what annual output would the company be indifferent between the two locations?
A) 60,000 units
B) 15,000 units
C) 10,000 units
D) 20,000 units
E) 4,000 units

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: $$\begin{array} { l c c } 
\text { Location } & \mathrm { FC } \text { (annual) } & \mathrm { VC } \text { (per unit) } \
\hline \text { Atlanta } & \$ 80,000 & \$ 20 \
\text { Phoenix } & \$ 140,000 & \$ 16
\end{array}$$ At what annual output would the company be indifferent between the two locations?
A) 60,000 units
B) 15,000 units
C) 10,000 units
D) 20,000 units
E) 4,000 units

Quizplus · Accepted Answer

The Answer of 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: $$\begin{array} { l c c } 
\text { Location } & \mathrm { FC } \text { (annual) } & \mathrm { VC } \text { (per unit) } \
\hline \text { Atlanta } & \$ 80,000 & \$ 20 \
\text { Phoenix } & \$ 140,000 & \$ 16
\end{array}$$ At what annual output would the company be indifferent between the two locations?
A) 60,000 units
B) 15,000 units
C) 10,000 units
D) 20,000 units
E) 4,000 units

A Manufacturing Firm Is Considering Two Locations for a Plant