Wiebe Trucking, Inc., is planning a new warehouse to serve the western United States. Denver, Santa Fe, and Salt Lake City are under consideration. For each location, annual fixed costs (rent, equipment, and insurance) and average variable costs per shipment (labor, transportation, and utilities) are listed in the following table. Sales projections range from 550,000 to 600,000 shipments per year. Location Annual FixedCosts Variable Costsper Shipment Denver Santa Fe Salt Lake City $5,000,000 $4,200,000 $3,500,000 $4.65 $6.25 $7.25 a. Plot the total cost curves for all the locations on a single graph. b. Which city provides the lowest overall costs?

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Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.