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Air Frame Technology, Inc. incurs a variable cost of $16 per kilogram for raw material to produce a special alloy used in manufacturing aircraft.
Required:
1. Draw a graph of the firm's raw material cost, showing the total cost at the following production levels: 50,000 kilograms, 100,000 kilograms, and 150,000 kilograms.
2. Prepare a table that shows the unit cost and total cost of raw material at the following production levels: 1 kilogram, 50 kilograms, and 5,000 kilograms.
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