Use shadow costs to calculate the total production costs

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Reference no: EM13801147

A brewery produces regular beer and a lower carb light beer. steady customers of the brewery buy 10 units of regular beer and 15 units of light beer monthly. while setting up the brewery the management decided to produce extra beer, beyond that needed to satisfy customers. the cost per unit of regular beer is $32000and the cost per unit of light beer is $50000. Every unit of regular beer brings in $120000 in revenue, while every unit of light beer brings in $300000 in revenue. the brewery wants atleast $900000 in revenue. Alteast 20 additional units can be sold.

a) How much of each type of beer should be made so as to minimize total production costs?

b) Suppose the minimum revenue is increased to $9500000. Use shadow costs to calculate the total production costs.

Reference no: EM13801147

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