Northwest manufactures a product requiring 0.5 ounces of platinum per unit. The cost ofplatinum is approximately $360 per ounce, the company maintains an ending platinuminventory equal to 10% of the following month's production usage. The following data weretaken from the most recent quarterly production budgetAugustSeptember980JulyPlanned production in units1,0001,100The cost of platinum to be purchased to support August production is:$195,840.1,1O $198,000.O $200,160.

Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Northwest manufactures a product requiring 0.5 ounces of platinum per unit The cost of platinum is approximately $360 per ounce, the company maintains an ending platinum inventory equal to 10% of the following month's production usage The following data were aken from the most recent quarterly production budget Septembe July 1,000 August 1,100 980 Planned production in units he cost of platinum to be purchased to support August production is $195,840. 1,1 O $198,000. O $200,160.

Northwest manufactures a product requiring 0.5 ounces of platinum per unit The cost of platinum is approximately $360 per ounce, the company maintains an ending platinum inventory equal to 10% of the following month's production usage The following data were aken from the most recent quarterly production budget Septembe July 1,000 August 1,100 980 Planned production in units he cost of platinum to be purchased to support August production is $195,840. 1,1 O $198,000. O $200,160.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.

Question

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Northwest manufactures a product requiring 0.5 ounces of platinum per unit. The cost of
platinum is approximately $360 per ounce, the company maintains an ending platinum
inventory equal to 10% of the following month's production usage. The following data were
taken from the most recent quarterly production budget
August
September
980
July
Planned production in units
1,000
1,100
The cost of platinum to be purchased to support August production is:
$195,840.
1,1
O $198,000.
O $200,160.

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Q Total Cost ATC AFC MC 0 10 - - - 10 12 12/10=1.2 10/10=1 12-10/10-0=0.2 20 16 16/20=0.8 10/20=0.5 16-12/20-10=0.4 30 26 26/30=0.867 10/30=0.333 26-16/30-20=1 40 38 38/40=0.95 10/40=0.25 38-26/40-30=1.2 50 75 75/50=1.2 10/50=0.2 75-38/50-40=3.7 60 120 120/60=2 10/60=0.167 120-75/60-50=4.5 If the market price is $1.00 then what output or q (in the units of 10) is the most profitable production level?
1 17 2 345 5 6 Seed Average Price 3 Marketing Year Index $/short ton 4 127.7 192.4 7 8 B 9 10 11 12 13 14 15 16 17 18 1 2 3 4 5 6 7 8 9 10 11 C 12 13 14 15 Historical Price Data Oil D 242 242 274 242 290 347.2 436 422.8 466 582 508 428 434 Average Price Index $/short ton 317.8 465 662.2 668.2 791.3 732 951 1123 1297.3 1312 1416 1664 1317.4 1182.4 1334.4 E Mash Average Price Index $/short ton 63 87 105 111 124 108 134 153 193 187 193 247 242 197 210
General Motors Corporation in their Detroit plant, makes industrial strength eight-cylinder engines that are used in their heavy duty automobiles Operations manager at Detroit plant has developed the following supply, demand, cost, and inventory data for future planning purposes. Supply Available Regular Time Demand Forecast Period Overtime Subcontract 1 40 15 10 40 2 30 15 10 55 3 30 20 10 50 20 units $100 Initial inventory Regular-time cost per unit Overtime cost per unit Subcontract cost per unit $160 $200 Carrying cost per unit per month $6 Assuming the initial inventory has no holding cost in the first period and that backorders are not permitted.
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