A Manufacturing Firm Is Considering Two Locations for a Plant

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: $$\begin{array} { l r l } \text { Location } & \mathrm { FC } \text { (annual) } & \mathrm { VC } \text { (per unit) } \\\hline \text { Atlanta } & \$ 80,000 & \$ 20 \\\text { Phoenix } & \$ 140,000 & \$ 16\end{array}$$ 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

Correct Answer:

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