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A manufacturing firm is considering two locations for a plant to produce a new product. The two locations have fixed and variable costs as follows:

A manufacturing firm is considering two locations for a plant to produce a new product. The two locations have fixed and variable costs as follows:

Location Fixed cost variable cost
Atlanta $83,000 $27/unit
Phoenix $132,000 $18/unit

Which alternative will have lower cost when they plan to produce 50,000 units of product per year

Atlanta

Both of them have almost same cost

Phoenix

Can not be decided

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