The Acme Manufacturing company produces a variety of lawn furniture. You have been

asked to analyze the monthly cash flow, which is defined as the total revenue minus the total

cost. In particular you need to determine the mean and variance of the monthly cash flow.

The variable cost per unit produced is $15, and the fixed cost is $2000 per month. The

selling price is $20 per unit. The quantity sold per month is random with mean 500 and

variance 2500. The quantity produced is also a random variable with mean 500 and variance

1600. Quantity produced and quantity sold have a correlation of 0.40. What are the mean

and variance of monthly cash flows?