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 is constant so long as output is less than capacity, which is the maximum output of the plant. The cost structure for each type of plant is as follows: Plant A Plant C Plant B Average Variable Costs $1.10 $2.40 $3.70 Labor Materials 1.20 0.90 1.80 Other 0.50 2.40 2.00 Total $2.50 $6.00 $7.50 $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 B. (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? . $0.75 $0.375 $0.50 $0.375 b. $6.75 $6.375 $6.25 $6.1875 C. $6.75 $6.75 $6.75 $6.75 d. $6.75$12.75 $18.75 $24.75

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
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 is constant so long as output is less than capacity, which is the maximum output of the plant. The cost structure for
each type of plant is as follows:
Plant A
Plant C
Plant B
Average Variable Costs
$1.10
$2.40
$3.70
Labor
Materials
1.20
0.90
1.80
Other
0.50
2.40
2.00
Total
$2.50
$6.00
$7.50
$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 B. (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?
. $0.75 $0.375 $0.50 $0.375
b.
$6.75 $6.375 $6.25 $6.1875
C. $6.75 $6.75 $6.75 $6.75
d.
$6.75$12.75 $18.75 $24.75
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 is constant so long as output is less than capacity, which is the maximum output of the plant. The cost structure for each type of plant is as follows: Plant A Plant C Plant B Average Variable Costs $1.10 $2.40 $3.70 Labor Materials 1.20 0.90 1.80 Other 0.50 2.40 2.00 Total $2.50 $6.00 $7.50 $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 B. (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? . $0.75 $0.375 $0.50 $0.375 b. $6.75 $6.375 $6.25 $6.1875 C. $6.75 $6.75 $6.75 $6.75 d. $6.75$12.75 $18.75 $24.75
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

Blurred answer
Similar 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