Homework Help is Here – Start Your Trial Now!
Business
Economics
a) Using the line drawing tool, add the total cost graph for Stan to produce the assembly instead of purchasing from Salt Lake Supply, Total cost for the purchase option is already plotted. Properly label your line. Note: Carefully follow the instructions above and only draw the required object

a) Using the line drawing tool, add the total cost graph for Stan to produce the assembly instead of purchasing from Salt Lake Supply, Total cost for the purchase option is already plotted. Properly label your line. Note: Carefully follow the instructions above and only draw the required object

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
See similar textbooks
icon
Related questions
Question
Please add the total cost to produce the assembly
**Transcription** Stan Fawcett's company currently purchases a gear assembly from Salt Lake Supply, Inc., at $4.20 per unit with a minimum order of 3,000 units. Stan is considering instead producing the gear assembly himself. He estimates that producing it himself will cost $16,000 to set up the process and then $1.75 per unit for labor and materials. a) **Using the line drawing tool,** add the total cost graph for Stan to produce the assembly instead of purchasing from Salt Lake Supply. Total cost for the purchase option is already plotted. Properly label your line. *Note: Carefully follow the instructions above and only draw the required object.* **Graph Explanation** The graph provided illustrates the cost comparison for the gear assembly: - **Horizontal Axis (X-axis):** Represents the quantity of gear assemblies. - **Vertical Axis (Y-axis):** Represents the cost in dollars. - **Red Line:** Represents the total cost of purchasing from Salt Lake Supply, starting at $0 and increasing steeply after the minimum order of 3,000 units. The fixed cost (flat portion) is presented up to the 3,000 units due to the minimum order requirement. - **Minimum Order Line:** A vertical dashed line at the 3,000-unit mark indicating the minimum order threshold for purchasing. To complete the task, a graph line needs to be drawn that reflects Stan’s estimated costs for producing the assembly himself—from the setup cost of $16,000, increasing by $1.75 per additional unit produced.
Transcribed Image Text:**Transcription** Stan Fawcett's company currently purchases a gear assembly from Salt Lake Supply, Inc., at $4.20 per unit with a minimum order of 3,000 units. Stan is considering instead producing the gear assembly himself. He estimates that producing it himself will cost $16,000 to set up the process and then $1.75 per unit for labor and materials. a) **Using the line drawing tool,** add the total cost graph for Stan to produce the assembly instead of purchasing from Salt Lake Supply. Total cost for the purchase option is already plotted. Properly label your line. *Note: Carefully follow the instructions above and only draw the required object.* **Graph Explanation** The graph provided illustrates the cost comparison for the gear assembly: - **Horizontal Axis (X-axis):** Represents the quantity of gear assemblies. - **Vertical Axis (Y-axis):** Represents the cost in dollars. - **Red Line:** Represents the total cost of purchasing from Salt Lake Supply, starting at $0 and increasing steeply after the minimum order of 3,000 units. The fixed cost (flat portion) is presented up to the 3,000 units due to the minimum order requirement. - **Minimum Order Line:** A vertical dashed line at the 3,000-unit mark indicating the minimum order threshold for purchasing. To complete the task, a graph line needs to be drawn that reflects Stan’s estimated costs for producing the assembly himself—from the setup cost of $16,000, increasing by $1.75 per additional unit produced.
Expert Solution
Step 1: Introduce the concept of total cost.

In economics, the concept of total cost refers to the sum of all costs incurred in producing a certain level of output. It is typically expressed as the sum of all fixed costs and all variable costs.

steps

Step by step

Solved in 3 steps with 2 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Costs
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.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
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)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
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-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS