The Annual Fixed Costs for a production unit are $2,000,000. Variable Costs are related to Production Quantity as: Variable Costs = $15 + $.006 × Production Quantity

The Annual Fixed Costs for a production unit are $2,000,000. Variable Costs are related to Production Quantity as: Variable Costs = $15 + $.006 × Production Quantity. The Total Annual Cost = Fixed Costs + Variable Costs × Production Quantity. If the price of 1 produced part is $150;

a) Determine the Production Quantity that will minimize the Unit Cost of a produced part, and calculate the Annual Profit generated at this Production Quantity.

b) Determine the Production Quantity that will maximize the Annual Profit, and calculate the Annual Profit generated by the plant at this Production Quantity

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jeff jeffy answered 1 year ago

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