1. A chemical company produces sodium bisulfate in 100-pound bags. Demand for the product is 40 tons per day. The capacity for production is 80 tons per day. Setup cost is $140, and storage and handling costs are $15 per ton per year, and company incurs fixed cost of $10,000, the firm operates 250 days per year. (Note: 1 ton = 1,000 kilo grams) Required: a. What is the annual demand in tons? b. What is the economic production quantity of the company? c. What is the average fixed cost of producing 20,000 tones? d. What is the variable cost of producing 20,000 tones?
1. A chemical company produces sodium bisulfate in 100-pound bags. Demand for the product is 40 tons per day. The capacity for production is 80 tons per day. Setup cost is $140, and storage and handling costs are $15 per ton per year, and company incurs fixed cost of $10,000, the firm operates 250 days per year. (Note: 1 ton = 1,000 kilo grams) Required: a. What is the annual demand in tons? b. What is the economic production quantity of the company? c. What is the average fixed cost of producing 20,000 tones? d. What is the variable cost of producing 20,000 tones?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
1. A chemical company produces sodium bisulfate in 100-pound bags.
product is 40 tons per day. The capacity for production is 80 tons per day. Setup cost
is $140, and storage and handling costs are $15 per ton per year, and company incurs
fixed cost of $10,000, the firm operates 250 days per year. (Note: 1 ton = 1,000 kilo
grams)
Required:
a. What is the annual demand in tons?
b. What is the economic production quantity of the company?
c. What is the average fixed cost of producing 20,000 tones?
d. What is the variable cost of producing 20,000 tones?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education