To plot the total cost curves for the four potential plant locations, we need to consider the fixed and variable costs for each location. The total cost is the sum of the fixed and variable costs at different levels of production. Here's an example of how to calculate the total costs for location A at a given production level.
To plot the total cost curves for the four potential plant locations, we need to consider the fixed and variable costs for each location.
The fixed cost is the cost that remains constant regardless of the level of production, while the variable costs change with the level of production.
We can plot the total cost curves by taking the sum of the fixed and variable costs at different levels of production.
Here's an example of how to calculate the total costs for location A:
At zero production, the fixed cost is $250,000.
For each unit of production, the variable cost for material is $4, for labor is $3, and for overhead is $4.
So, at a production level of x units, the variable cost would be 4x + 3x + 4x = 11x.
Therefore, the total cost for location A at a production level of x units would be 250,000 + 11x.
By following a similar process, you can calculate the total costs for the other locations and plot their respective total cost curves on a single graph.