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Page 54 of 5t6 Next Page Note: It is recommended that you save your response as you complete each question Question 54 (2 points) An entertainment group is evaluating their strategy and planning to expand They have identified three different potential regions to target for this expansion project The fixed and vanable costs for these three potential locations are calculated to be Region Fixed Cost per Year Variable Cost per Customer $ 10 $700,000 $1.100,000 $1500000 $ 8 Which location is best for serving their market estimate of P400,000 people? O Region 3 O Region 1 O Region 2 None of the other choices Save Next Page Save All Responses Page 54 of 56

Explanation / Answer

The least cost for 400,001>400,000 is 4,300,007 which is for region 3.

The best location is Region 3

Fixed cost Variable cost per 400,001 people Total cost = Fixed + Variable cost Region 1          700,000 10 x 400,001 = 4,000,010                                                 4,700,010 Region 2      1,100,000 8x 400,001 = 3,200,008                                                 4,300,008 Region 3      1,500,000 7 x 400,001 = 2,800,007                                                 4,300,007

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