You Are Trying to Estimate the Annual Cost of Setting

Multiple Choice

You are trying to estimate the annual cost of setting up a branch of a manufacturing business in Vancouver, based on your experience of running a similar business in Halifax. The original business produces 800 units per year, whereas the Vancouver branch will produce 1 700. If the cost of setting up the Halifax operation was $9 000 000 and the capacity factor is 0.6, give an order of magnitude estimate for the cost of setting up the Vancouver operation.

A) $5 400 000
B) $11 475 000$
C) $14 147 000
D) $19 125 000
E) $20 250 000