Using Appendix 2 and other information, consider the following two possible locations for CR's new factory. Which location should Charly choose? Justify your answer. - Location A - Location B Location A: . . . . . . . Location B: . . . . . . . Recommendation: . . . . . . .

Justification might include:
- Charly should choose Location A as the total costs each week are less than half that for Location B and this will help CR get started without needing to borrow all \(\$ 20000\) from the bank. A smaller bank loan will reduce interest payments and make it less likely that CR fails. Location B has higher average costs which may result in a higher price for the rugs making them less likely to sell.
- Charly should choose Location B as it is twice as large as Location A and can produce double the output at 40 rugs each week so in the long term when CR has become well known Charly can meet demand without needing to move to a larger factory.