Question
1.You have one machine in your factory that is needed for two different products. Variable cost / unitFixed cost / monthSales priceTime on machine /
1.You have one machine in your factory that is needed for two different products.
Variable cost / unitFixed cost / monthSales priceTime on machine / unit
Product A3.96150,000154.6 mins
Product B2.940,000TBD3.3 mins
The machine can be used for a total of 1200 minutes per day (4 hours downtime for maintenance).
First, calculate the shadow cost of a minute of machine time based on product A. {Round to 2 decimal places.)
2.Notwithstanding the answer you got for the prior question, assume the shadow cost is $3.
Product A can be completely sold at the $15 price regardless of production volume.
Product B has a much smaller market with a downward sloping demand curve with the following form:
Daily sales volume = 150 - Sales price x 5.6.
First determine the appropriate total variable cost per unit for product B inclusive of opportunity cost. {Round to 2 decimal places.)
3.Notwithstanding the answer you got to the prior question, assume the variable cost per unit including opportunity cost is $10 for product B.
What price should you charge for product B to maximize your company's total profit? (Choose a price to the cent, so 2 decimal places.)
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