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 FC (annual) VC (per unit) Atlanta $ 80,000 $ 20 Phoenix $ 140,000 $ 16 If the annual demand will be 20,000 units, what would be the cost advantage of the better location?

(Incomplete Question) The question is missing options to choose from; here are the missing options:

Cost advantage of the better location is $20000 ( Option 4).

Explanation:

Data:

Annual demand = 20000 units.

Fixed cost for Phoenix = $80000.

Variable cost for Phoenix = $20 per unit.

Fixed Cost for Atlanta = $140,000.

Variable cost for Atlanta = $16 per unit.

Step 1: Calculating total costs for both locations:

Phoenix:

Atlanta:

Step 2: Subtracting both costs to get cost advantage of better location:

Total cost of Phoenix - Total cost of Atlanta =

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