Question

a manfucturing firm is considering two locations for a plant to producr a new product. Location A has a foxed cost of 80,000 and a variable cost of 20 per unit where should the plant be located

Answer 1

Answer: 15,000 units

Explanation:

The annual output that would make them indifferent is the one that would equate both costs.

Assume that output is x.

80,000 + 20x = 140,000 + 16x

20x - 16x = 140,000 - 80,000

4x = 60,000

x = 60,000/4

x = 15,000 units