Q4 An item used in the assembly of an electronic device can be bought at a disco
ID: 1093546 • Letter: Q
Question
Q4 An item used in the assembly of an electronic device can be bought at a discounted rate as shown below. Price Quantity For the first 500 $16.50/unit For the next 1000 $16.00/unit Over 1500 $15.00/unit Calculate the average and marginal cost per unit for quantities of 400, 1200, and 2500 respectively. Note: i. Life cycle cost: All expenditures or costs involved in owning, operating and disposing an asset after its useful life. All costs incurred from cradle to grave of a product are included in the computation of life cycle costs. ii. Average cost: This is the total cost over the number of units produced. In manufacturing, if the total cost of manufacturing is $10,000 to produce 5000 units, then the average cost per unit is $2. iii. Marginal cost: this cost will be incurred for producing one additional unit. Quantity: 400 Average Cost Marginal Cost Quantity: 1200 Average Cost Marginal Cost Quantity: 2500 Average Cost Marginal CostExplanation / Answer
Below are the table results:
Explanation:
Tier 1 cost is $16.50 for up to 500. $8250 is the max tier 1 costs
Tier 2 cost is $16 for unit up to a max of 1500 units and over 500. Max tiere 2 will be $16*1000 = $16000
Tier 3 cost is $15 for each unit above 1500 units.
Total Cost adds all three tier costs together.
Unit cost = total cost / Number of units
Marginal Cost is cost to make the next unit depending on what tier the next unit fall on.
QTY Cost Tier 1 Cost Tier 2 Cost Tier 3 Total Cost Unit cost Marginal Cost 400 $ 6,600.00 $ - $ - $ 6,600.00 $ 16.50 $ 16.50 1200 $ 8,250.00 $ 11,200.00 $ - $ 19,450.00 $ 16.21 $ 16.00 2500 $ 8,250.00 $ 16,000.00 $ 15,000.00 $ 39,250.00 $ 15.70 $ 15.00Related Questions
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