Annual Fixed Variable Costs Location Costs per Shipment Denver $5,000,000 $4.65 Santa Fe $4,200,000 $6.25 Salt Lake City $3,500,000 $7.25
Annual Fixed Variable Costs Location Costs per Shipment Denver $5,000,000 $4.65 Santa Fe $4,200,000 $6.25 Salt Lake City $3,500,000 $7.25
Chapter19: Pricing Concepts
Section: Chapter Questions
Problem 6DRQ
Related questions
Question
Wiebe Trucking, Inc., is planning a new warehouse to serve
the western United States. Denver, Santa Fe, and Salt Lake
City are under consideration. For each location, annual fixed
costs (rent, equipment, and insurance) and average variable
costs per shipment (labor, transportation, and utilities) are
listed in the following table. Sales projections range from
550,000 to 600,000 shipments per year.a. Plot the total cost
graph.
b. Which city provides the lowest overall costs?
![Annual Fixed
Variable Costs
Location
Costs
per Shipment
Denver
$5,000,000
$4.65
Santa Fe
$4,200,000
$6.25
Salt Lake City
$3,500,000
$7.25](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdb055a79-17e5-4446-a576-fdcc5af10453%2Ff096f248-1e69-4bcf-87ce-434bc81ca6a4%2Fs6ruu5u_processed.png&w=3840&q=75)
Transcribed Image Text:Annual Fixed
Variable Costs
Location
Costs
per Shipment
Denver
$5,000,000
$4.65
Santa Fe
$4,200,000
$6.25
Salt Lake City
$3,500,000
$7.25
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