What is the annual savings over the other design

Assignment Help Econometrics

Reference no: EM13189979

Consider two possible designs for a product which are sold for $0.70 each. There are only two differences in the production of both designs: operation 1 and operation 2. The first product, A, requires 16 hours of operation 1 and 4.5 hours of operation 2 for 1,000 units. The second product, B, requires 7 hours of operation 1 and 12 hours of operation 2 for 1,000 units. The variable operating costs of operation 1 (labor, materials, and maintenance) is $18.60 per hour. The variable operating cost of operation 2 (labor, materials, and maintenance) is $16.90 per hour. There is a sunk cost of $5,000 for product A and $9,000 for product B. Hint: Be careful in your consideration of sunk costs in making your decisions.
a) Which design should be adopted if 125,000 products are sold each year?

b) What is the annual savings over the other design?

Reference no: EM13189979

Questions Cloud

Calculate a 99% confidence interval for the population mean : A survey of 50 students found that on average they drink 2.3 beers a night with a standard deviation of 0.7. Calculate a 99% confidence interval for the population mean.

E-business / e-commerce : What do you predict to be the most significant new trend (paradigm) in E-Business / E-Commerce?

Find the speed of each train : the speed of a passenger train is 14 mph faster than the speed of a freight train. The passenger train travels 280 miles in the same time it takes the freight train to travel 210 miles. Find the speed of each train.

Define what is mass aluminum sulfate : What mass of precipitate forms when 124.5 mL of 0.660 M NaOH is added to 517 mL of a solution that contains 10.9 g aluminum sulfate per liter?

What is the annual savings over the other design : Consider two possible designs for a product which are sold for $0.70 each. There are only two differences in the production of both designs: operation 1 and operation 2. The first product, A, requires 16 hours of operation 1 and 4.5 hours of opera..

What should be the price of the ticket if the game is fair : A lottery offers one $1000 prize, one $500 prize, five $100 prizes, and ten $10 prizes. One thousand tickets are sold. What should be the price of the ticket if the game is fair?

Translate the phrase to an algebraic expression : Justin had $33 before spending b dollars on jeans. How much money remains?

Distinction between nature and custom : Your essay assignment is to compare Democritus and the Sophists (Protagoras and Gorgias) on the distinction between nature and custom (or law). In Philosophy Before Socrates, McKirihan does not include Democritus in his discussion of this distinction..

Why might zenvox choose to produce at a price : The Zenvox TV Company faces a demand function for its products that can be expressed as Q = 4,000 - P + 0.5i, where Q is the number of tv's, P is the price per tv, and i is the average monthly income. Average monthly income is currently equal to $..

User Account

All Pages