3. The fixed and variable costs for 3 potential plant sites for a ski equipment manufacturer are shown below.

Site Fixed Cost Per Year Variable Cost Per Unit

Atlanta $250 $7

Burlington $500 $6

Cleveland $1000 $5

(a) Graph the total cost lines for the three potential sites. (use x=0 and x=300 to draw the graph) (Note that you must show 2 intersection points on the graph). (3 points)

(b) Over what range of annual volume is each location the preferable one? (You must derive how to find the intersection points mathematically). (3 points)

(c) If expected volume is 400 units, which location would you recommend? (2 points)