Jessica Martin is establishing a company that would be well suited to three areas, New Orleans, Los Angeles, and New York. The respective fixed and variable costs for one year are as follows:

Using the location breakeven method, determine the best cost location for 1,000,000, 2,000,000, and 3,000,000 units. Plot the options on a graph and indicate the areas of lowest cost.

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Fixed City Costs Variable Costs per Unit Total Cost at 1,000,000 Units Total Cost at 2,000,000 Units Total Cost at 3,000,000 Units New Orleans $500,000 $100 $1,500,000 $2,500,000 $3,500,000 Los Angeles $800,000 $80 $1,600,000 $2,400,000 $3,200,000 New York $950,000 $60 $1,550,000 $2,150,000 $2,750,000