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Use the following data for answering Questions 3-6: The Haverford Company is considering three types of plants to make a particular electronic device. Plant A is much more highly automated than plant B, which in turn is more highly automated than plant C. For each type of plant, average variable cost each type of plant is as follows: constant so long as output is less than capacity, which is the maximum output of the plant. The cost structure for Plant C Plant A Plant B Average Variable Costs $1.10 $2.40 $3.70 Labor 0.90 Materials 1.20 1.80 Other 0.50 2.40 2.00 $2.50 $6.00 $7.50 Total $300,000 $75,000 $25,000 Total fixed costs Annual capacity $50,000 200,000 100,000 Derive the average costs of producing 100,000, 200,000, 300,000, and 400,000 devices per year with Plant C. (NOTE: for output exceeding the capacity of a single plant, assume that more than one plant of this type is built, i.e., all inputs are duplicated in each additional plant. What are the average costs per unit for the four market output levels? a. $8.00 $4.25 $2.375 $1.4375 b. $8.00 $8.00 $8.00 $8.00 C. $8.00 $15.50 $23.00 $30.50 d. $8.00 $7.75 $7.667 $7.625

Use the following data for answering Questions 3-6: The Haverford Company is considering three types of plants to make a particular electronic device. Plant A is much more highly automated than plant B, which in turn is more highly automated than plant C. For each type of plant, average variable cost each type of plant is as follows: constant so long as output is less than capacity, which is the maximum output of the plant. The cost structure for Plant C Plant A Plant B Average Variable Costs $1.10 $2.40 $3.70 Labor 0.90 Materials 1.20 1.80 Other 0.50 2.40 2.00 $2.50 $6.00 $7.50 Total $300,000 $75,000 $25,000 Total fixed costs Annual capacity $50,000 200,000 100,000 Derive the average costs of producing 100,000, 200,000, 300,000, and 400,000 devices per year with Plant C. (NOTE: for output exceeding the capacity of a single plant, assume that more than one plant of this type is built, i.e., all inputs are duplicated in each additional plant. What are the average costs per unit for the four market output levels? a. $8.00 $4.25 $2.375 $1.4375 b. $8.00 $8.00 $8.00 $8.00 C. $8.00 $15.50 $23.00 $30.50 d. $8.00 $7.75 $7.667 $7.625

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Use the following data for answering Questions 3-6: The Haverford Company is considering three types of plants to make a particular electronic device. Plant A is much more highly automated than plant B, which in turn is more highly automated than plant C. For each type of plant, average variable cost each type of plant is as follows: constant so long as output is less than capacity, which is the maximum output of the plant. The cost structure for Plant C Plant A Plant B Average Variable Costs $1.10 $2.40 $3.70 Labor 0.90 Materials 1.20 1.80 Other 0.50 2.40 2.00 $2.50 $6.00 $7.50 Total $300,000 $75,000 $25,000 Total fixed costs Annual capacity $50,000 200,000 100,000 Derive the average costs of producing 100,000, 200,000, 300,000, and 400,000 devices per year with Plant C. (NOTE: for output exceeding the capacity of a single plant, assume that more than one plant of this type is built, i.e., all inputs are duplicated in each additional plant. What are the average costs per unit for the four market output levels? a. $8.00 $4.25 $2.375 $1.4375 b. $8.00 $8.00 $8.00 $8.00 C. $8.00 $15.50 $23.00 $30.50 d. $8.00 $7.75 $7.667 $7.625
Transcribed Image Text:Use the following data for answering Questions 3-6: The Haverford Company is considering three types of plants to make a particular electronic device. Plant A is much more highly automated than plant B, which in turn is more highly automated than plant C. For each type of plant, average variable cost each type of plant is as follows: constant so long as output is less than capacity, which is the maximum output of the plant. The cost structure for Plant C Plant A Plant B Average Variable Costs $1.10 $2.40 $3.70 Labor 0.90 Materials 1.20 1.80 Other 0.50 2.40 2.00 $2.50 $6.00 $7.50 Total $300,000 $75,000 $25,000 Total fixed costs Annual capacity $50,000 200,000 100,000 Derive the average costs of producing 100,000, 200,000, 300,000, and 400,000 devices per year with Plant C. (NOTE: for output exceeding the capacity of a single plant, assume that more than one plant of this type is built, i.e., all inputs are duplicated in each additional plant. What are the average costs per unit for the four market output levels? a. $8.00 $4.25 $2.375 $1.4375 b. $8.00 $8.00 $8.00 $8.00 C. $8.00 $15.50 $23.00 $30.50 d. $8.00 $7.75 $7.667 $7.625
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