Untitled document (43)
.pdf
keyboard_arrow_up
School
University of the People *
*We aren’t endorsed by this school
Course
3304
Subject
Economics
Date
Apr 3, 2024
Type
Pages
2
Uploaded by CaptainGalaxyZebra39
a.
The preparation of the required differential analysis is as follows-
Particulars
Alternative-1
(Making it
internally) (A)
Alternative-2
(Buying outside)
(B)
Differential
amount
(C=A-B)
Alternative-1
is
Variable costs-
Cost of outsourcing
production (1)
$0
$675,000
(15,000x45)
-$675,000 Lower
Direct material (2)
$120,000
$0
$120,000 Higher
Direct labor (3)
$150,000
$0
$150,000 Higher
Manufacturing
overhead (4)
$165,000
$0
$165,000 Higher
Fixed costs (5)
$390,000
$78,000
$312,000 Higher
Total production costs
(6=1+2+3+4+5+6)
$825,000
$753,000
($825,000 x
20%)
$72,000 Higher
b. Alternative-2 is the best.
Considering that alternative-2's production costs ($753,000) are less than alternative-1's
($825,000) manufacturing costs, it is advised that alternative-2 be chosen (outsourcing
production). Therefore, alternative-2 is the best option (outsourcing production).
c. Summarize the result of outsourcing production using the format presented in Figure 7.3.
Outsourcing production of quality glass analysis
Variable production costs
Cost increase to purchase externally (45*15000)
($ 675,000)
Direct labor
150,000
Manufacturing overhead cost saving
165,000
Direct materials $120,000
Fixed production costs
$312,000
&
Cost Increase from outsourcing $72,000
References
Klingensmith, J. Z. (2019, August 26).
Costs and production
. Pressbooks.
https://psu.pb.unizin.org/introductiontomicroeconomics/chapter/chapter-6-costs-and-prod
uction/
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Related Questions
The figure shows graphs of the total cost function and the total revenue function for a commodity. (Assume cost and revenue are measured in dollars.)
میرے
y
500
400
300
200
100
10 20
30
(a) Label each function correctly.
function A
| ---Select---
function B | ---Select---
(b) Determine the fixed costs.
$
40
50
A
B
60
X
arrow_forward
The diagram illustrates isoprofit curves and the marginal cost curve of MQ2020, a luxury car manufactured by MQ Motors. Which statement incorrectly describes the diagram?
10,000
9,000
8,000-
7,000-
6,000-
5,000-
4,000
3,000
2,000
1,000
Price, marginal cost (5)
C(8,7500)
*A (35,6000)
(40, 3300)
Profit-QP-AC)
Marginal cost
hoprofit curve $150,000
boprofit curve $70,000
Zenic procure (AC
0
0 10 20 30 40 50 60 70 80 90 100 110 120
Quantity of cars, Q
Select one
Oa if the price is equal to the average cost, MQ Motors' profits decrease until it sells 40 cars, and then start to increase.
Ob Given the same quantity of cars, MQ Motors" profits increase as price increases.
OC The shape of MQ Motors' cost function affects the shape of their isoprofit curves
Od. MQ Motors incurs increasing marginal cost
Oe It MQ Motors sells 35 cars at P-$5,000, it makes profits higher than $70,000.
arrow_forward
If JMJ Industries realizes a profit of $4.00 per unit sold, what is the fixedcost portion of their production costs? Their variable costs are $1.50 per unit, and they sell 1000 units per year at a price of $6.00 per unit. (a) There are no fixed costs in this type of problem. (b) $250 (c) $500 (d) $2000
arrow_forward
· Opportumity cost is:
Ta) That which we forgo or give up, when we make a choice or a decision.
(b) A cost that cannot be avoided, regardless what is. done in the future
(c) The additional cost of producing an additional unit of output
(d) The additional cost of buying an aditional unit of a product
arrow_forward
Process A has fixed costs of $10,000 and unit costs of $4.50 each, and Process B has fixed costs of $25,000 and unit costs of $1.50 each. At what level of annual production would the two processes have the same cost? (a) 50 units (b) 500 units (c) 5000 units (d) 50,000 units?
arrow_forward
An assembly line can produce 80 units per hour. The line's hourly
cost is $4250 on straight time (the first 8 hours). Workers are
guaranteed a minimum of 5 hours. There is a 35% premium for
overtime, however, productivity for overtime drops by 10%. What are
the average and marginal costs per unit for the following daily
quantities?
(a) 350
(b) 500
(c) 640
(d) 850
arrow_forward
An assembly line can produce 60 units per hour. The line’s hourly cost is $3600 on straight time (the first 8 hours). Workers are guaranteed a minimum of 6 hours. There is a 50% premium for overtime, and productivity for overtime drops by 5%. What are the average and marginal costs per unit for the following daily quantities? (a) 300. (b) 400. (c) 500. (d) 600.
arrow_forward
Suppose a company has fixed costs of $300 and variable costs of 3/4 x+1460 dollars per unit, where x is thetotal number of units produced. Suppose further that the selling price of its product is 1500−1/4 x dollars per unit.(a) Find the break-even points.(b) Find the maximum revenue.(c) Form the profit function from the cost and revenue functions and find maximum profit.(d) What price will maximize the profit?
arrow_forward
2. For the estimates below, calculate the
following.
(a) Breakeven quantity per month.
(b) Profit (loss) per unit at sales levels
that are 10% above and 10% below
breakeven.
r = $39.95 per unit v = $24.75 per unit FC
=$4,000,000 per year
arrow_forward
A manufacturing plant wishes to buy a new equipment so the purchasing department did some research on
different types of this equipment. In the monthly meeting, the purchasing department presented a report
about the two types of equipment that they have found. Pertinent data are as follows:
Туре А
Туре В
First cost
P250,000
P350,000
Annual operating cost
30,000
22,000
Annual labor cost
52,000
34,000
Insurance and property taxes
3%
3%
Labor/Payroll taxes
4%
4%
Estimated life
10
10
If the minimum required rate of return is 19%,
1. What is the annual worth of Type A? [ Select ]
2. What is the annual worth of Type B? [ Select ]
3. Which machine should be selected? [ Select ]
>
arrow_forward
300
250
200
150
100
50
$
TC
30. The minimum Average Variable Cost is
(a) $4
(b) $5
(c) $10
(d) $12
TVC
TFC
0
Q
0 2 4 6 8 10 12 14 16 18 20
30
25
20
15
10
5
SA
$
0
0 2 4 6 8 10 12 14 16 18 20
MC
AC
AVC
AFC
Q
arrow_forward
No written by hand solution
arrow_forward
The marginal cost (MC) curve of a supplier will intersect the average total cost (ATC) curve:
(a) at the ATC's minimum point.
(b) as the ATC is decreasing.
(c) as the ATC is increasing.
(d) None of the above.
arrow_forward
A certain masonry dam requires 500,000 cu.m. of gravel for its construction. The contractor
found two possible sources for the gravel with the following data:
Source A
Source B
1.0 km
Average distance, gravel pit to dam 4.0 km
site
Gravel cost/cu.m. at pit
Purchase price of pit
Road construction necessary
Overburden to be removed at
P50.00/cu.m.
Hauling cost per cu.m. per km
P415.00
-------
P800,000.00
P450,000.00
None
80,000 cu.m.
P7.00
P7.00
Which of the two sites will give lesser cost?
arrow_forward
Define the term engineering economic decisions?
arrow_forward
BVM manufactured and sold 25,000 small statues this past year. At that volume, the firm was exactly in a breakeven situation in terms of profitability. BVM’s unit costs are expected to increase by 30% next year. What additional information is needed to determine how much the production volume/sales would have to increase next year to just break even in terms of profitability? (a) Costs per unit (b) Sales price per unit and costs per unit (c) Total fixed costs, sales price per unit, and costs per unit (d) No data is needed, the volume increase is 25, 000 + 25, 000(0.30) = 32, 500 units.
arrow_forward
Bags/Participants
Fixed Cost
Variable Cost
Total Cost
0
$1,700
$ -
$1,700
100
$1,700
$500
$2,200
200
$1,700
$1,200
$2,900
300
$1,700
$2,700
$4,400
400
$1,700
$5,200
$6,900
500
$1,700
$9,000
$10,700
600
$1,700
$15,000
$16,700
700
$1,700
$23,800
$25,500
800
$1,700
$36,800
$38,500
900
$1,700
$55,800
$57,500
1,000
$1,700
$83,000
$84,700
Given the above information on cost, if you charge $15 per entry, what is the breakeven quantity of bags that you should order? At what quantity of bags will profits be maximized?
A
Use the profit maximizing rule, MR ≥ MC, buy 300 bags.
B
Use the profit maximizing rule, MR ≥ MC, buy 200 bags.
C
Use Qb = F/(MR-AVC) where Qb is the breakeven quantity to be determined, the optimal quantity of bags is 300.
D
Use Qb = F/(MR-AVC) where Qb is the breakeven quantity to be determined, the optimal quantity of bags is 200.
arrow_forward
Reven
costs
Co
Fevenue
100
300
400
Figure 2
14) Based on the information in Figure 2, the total fixed costs are equal to:
(a) £100level of output.
(b) £2.
(c) £100 * level of output.
(d) £100.
(e) £500.
arrow_forward
Can you please help me answer this number 33 question? Thank you so much
arrow_forward
PROBLEM
You own a firm that offers organlc coconut oil. Your objective is to determine the number of
coconut oil to be produced each month in order to maximize revenues. The table below
shows the total benefits (revenues) and costs of producing various volumes of coconut oll (.
Control Variable (in
500 ml bottle)
Total Benefits
Total Costs
(B)
(C)
100
200
300
400
2000
3800
5400
6800
100
300
600
1000
500
600
700
800
900
1,000
8000
9000
9800
10400
10800
11000
1500
2100
2800
3600
4500
5500
1. Use the marginal analysis technique to determine the quantity of organic coconut oil that
will maximize net benefils. Present results in lable form and highlight the maximizing
level. (.
2. Graphically illustrate letter B. Separate the graphs for TB – TC approach, MB = MC rule,
and net benefit (maximum). The sequence of the graph: (1) TB - TC approach (topmost
graph); (2) net benefit (middle graph); and (3) MB, MC, & MNB (last, 3rd graph). But be
sure that the graphs are parallel in X-axis so as to…
arrow_forward
Please assist
arrow_forward
Cost leadership strategy
A all the above
(B) protects from the bargaining power of buyers
(C) defends against substitutes
(D) acts as a barrier against potential entrants
arrow_forward
Territory and Product Profitability Analysis
Pipeline Surfboards Inc. manufactures and sells two styles of surfboards, Atlantic Wave and Pacific Pounder. These surfboards are sold in two regions, East Coast and West Coast. Information about the two surfboards is as follows:
Line Item Description
Atlantic Wave
Pacific Pounder
Sales price
$400
$350
Variable cost of goods sold per unit
(148)
(165)
Manufacturing margin per unit
$252
$185
Variable selling expense per unit
(180)
(101)
Contribution margin per unit
$72
$84
The sales unit volume for the sales territories and products for the period is as follows:
Product
East Coast
West Coast
Atlantic Wave
2,460
1,230
Pacific Pounder
0
1,230
Question Content Area
a. Prepare a contribution margin by sales territory report. Compute the contribution margin ratio for each territory. Round contribution margin ratio answers to two decimal places.
Pipeline Surfboards Inc.Contribution Margin by Territory
Line…
arrow_forward
SEE MORE QUESTIONS
Recommended textbooks for you
Related Questions
- The figure shows graphs of the total cost function and the total revenue function for a commodity. (Assume cost and revenue are measured in dollars.) میرے y 500 400 300 200 100 10 20 30 (a) Label each function correctly. function A | ---Select--- function B | ---Select--- (b) Determine the fixed costs. $ 40 50 A B 60 Xarrow_forwardThe diagram illustrates isoprofit curves and the marginal cost curve of MQ2020, a luxury car manufactured by MQ Motors. Which statement incorrectly describes the diagram? 10,000 9,000 8,000- 7,000- 6,000- 5,000- 4,000 3,000 2,000 1,000 Price, marginal cost (5) C(8,7500) *A (35,6000) (40, 3300) Profit-QP-AC) Marginal cost hoprofit curve $150,000 boprofit curve $70,000 Zenic procure (AC 0 0 10 20 30 40 50 60 70 80 90 100 110 120 Quantity of cars, Q Select one Oa if the price is equal to the average cost, MQ Motors' profits decrease until it sells 40 cars, and then start to increase. Ob Given the same quantity of cars, MQ Motors" profits increase as price increases. OC The shape of MQ Motors' cost function affects the shape of their isoprofit curves Od. MQ Motors incurs increasing marginal cost Oe It MQ Motors sells 35 cars at P-$5,000, it makes profits higher than $70,000.arrow_forwardIf JMJ Industries realizes a profit of $4.00 per unit sold, what is the fixedcost portion of their production costs? Their variable costs are $1.50 per unit, and they sell 1000 units per year at a price of $6.00 per unit. (a) There are no fixed costs in this type of problem. (b) $250 (c) $500 (d) $2000arrow_forward
- · Opportumity cost is: Ta) That which we forgo or give up, when we make a choice or a decision. (b) A cost that cannot be avoided, regardless what is. done in the future (c) The additional cost of producing an additional unit of output (d) The additional cost of buying an aditional unit of a productarrow_forwardProcess A has fixed costs of $10,000 and unit costs of $4.50 each, and Process B has fixed costs of $25,000 and unit costs of $1.50 each. At what level of annual production would the two processes have the same cost? (a) 50 units (b) 500 units (c) 5000 units (d) 50,000 units?arrow_forwardAn assembly line can produce 80 units per hour. The line's hourly cost is $4250 on straight time (the first 8 hours). Workers are guaranteed a minimum of 5 hours. There is a 35% premium for overtime, however, productivity for overtime drops by 10%. What are the average and marginal costs per unit for the following daily quantities? (a) 350 (b) 500 (c) 640 (d) 850arrow_forward
- An assembly line can produce 60 units per hour. The line’s hourly cost is $3600 on straight time (the first 8 hours). Workers are guaranteed a minimum of 6 hours. There is a 50% premium for overtime, and productivity for overtime drops by 5%. What are the average and marginal costs per unit for the following daily quantities? (a) 300. (b) 400. (c) 500. (d) 600.arrow_forwardSuppose a company has fixed costs of $300 and variable costs of 3/4 x+1460 dollars per unit, where x is thetotal number of units produced. Suppose further that the selling price of its product is 1500−1/4 x dollars per unit.(a) Find the break-even points.(b) Find the maximum revenue.(c) Form the profit function from the cost and revenue functions and find maximum profit.(d) What price will maximize the profit?arrow_forward2. For the estimates below, calculate the following. (a) Breakeven quantity per month. (b) Profit (loss) per unit at sales levels that are 10% above and 10% below breakeven. r = $39.95 per unit v = $24.75 per unit FC =$4,000,000 per yeararrow_forward
- A manufacturing plant wishes to buy a new equipment so the purchasing department did some research on different types of this equipment. In the monthly meeting, the purchasing department presented a report about the two types of equipment that they have found. Pertinent data are as follows: Туре А Туре В First cost P250,000 P350,000 Annual operating cost 30,000 22,000 Annual labor cost 52,000 34,000 Insurance and property taxes 3% 3% Labor/Payroll taxes 4% 4% Estimated life 10 10 If the minimum required rate of return is 19%, 1. What is the annual worth of Type A? [ Select ] 2. What is the annual worth of Type B? [ Select ] 3. Which machine should be selected? [ Select ] >arrow_forward300 250 200 150 100 50 $ TC 30. The minimum Average Variable Cost is (a) $4 (b) $5 (c) $10 (d) $12 TVC TFC 0 Q 0 2 4 6 8 10 12 14 16 18 20 30 25 20 15 10 5 SA $ 0 0 2 4 6 8 10 12 14 16 18 20 MC AC AVC AFC Qarrow_forwardNo written by hand solutionarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you