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23 Oct 2023, 08:17
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Labor costs at location B: $23 million
Shipping costs for location B: $7 million
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
35%
(medium)
Question Stats:
77% (02:53) correct
23%
(03:08)
wrong
based on 726
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Data Insights (DI) Butler 2023-24 [Question #63, Date: Oct-23-2023] [Click here for Details]
Two locations are available for a new facility being planned. The facility will be an assembly plant, which will receive parts shipped to it from manufacturing locations around the country. Location A can provide cheaper labor, but because of its rural location, will require a larger budget for shipping of components to the facility. Location B, an urban site convenient to highways and rail lines, can function with a 30% smaller budget for shipping of the same quantities of components but will spend 15% more for the same labor, because of higher salaries in the area. At either location, the company’s budget will permit spending a total of $30 million for labor and shipping. If it has been determined that the budget for labor costs at location A will be twice the amount budgeted for shipping costs at that location, find the shipping costs and labor costs for location B.
| Labor costs at location B | Shipping costs for location B | |
| $5 million | ||
| $7 million | ||
| $11 million | ||
| $15 million | ||
| $20 million | ||
| $23 million |
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Official Answer
Labor costs at location B: $23 million
Shipping costs for location B: $7 million
28 Dec 2023, 12:33
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Official Explanation
Labor and shipping costs at location A total $30 million, and labor costs are twice shipping costs, so labor is $20 million, and shipping $10 million. At location B, labor is 15% higher, so $20 million + 0.15 × $20 million = $23 million, and the remaining $7 million is shipping costs.
Labor and shipping costs at location A total $30 million, and labor costs are twice shipping costs, so labor is $20 million, and shipping $10 million. At location B, labor is 15% higher, so $20 million + 0.15 × $20 million = $23 million, and the remaining $7 million is shipping costs.
