Q8. An assembly line can produce 60 units per hour. The line\'s hourly cost is $
ID: 1093549 • Letter: Q
Question
Q8. An assembly line can produce 60 units per hour. The line's hourly cost is $3600 on straight time (the firsts hours). Workers are guranteed a minium of 6 hours, There is a 50% premium for overtime, but productivity for overtime drops by 5%. What are the average and marginal costs per unit per unit for the following daily quantities? a) 300 b) 400 c) 500 d) 600 Quantity: 300 Average Cost Marginal Cost Quantity: 400 Average Cost Marginal Cost Quantity: 500 Average Cost Marginal Cost Quantity: 600 Average Cost Marginal CostExplanation / Answer
These are the results in table format:
Below are an explanation of the cost calculations for the table:
For 300 units, unit cost = (6 hours)($3600) / 300. Marginal cost is 0 for 301 units because they are required to work at least 6 hours. You might as well have them keep producing. $0 extra cost.
For 400 units Unit cost = (400 units / 60 units / hour) * 3600 / 400. Marginal cost for the 401st unit will be $3600/60 = $60 per unit.
For 500 units:
Regular time costs = (8 hours)($3600). This results in production of 480 units.
Over time will be: (20 units)(57 units / hour)($5400)
Unit Cost = (Regular + overtime) / 500
Marginal Cost = $5400 / 57 units
For 600 units:
Regular time costs = (8 hours)($3600). This results in production of 480 units.
Over time will be: (120 units)(57 units / hour)($5400)
Unit Cost = (Regular + overtime) / 500
Marginal Cost = $5400 / 57 units
QTY Cost Regular Time Cost Overtime Unit Cost Marginal Cost 300 $ 21,600.00 $ - $ 72.00 $ - 400 $ 24,000.00 $ - $ 60.00 $ 60.00 500 $ 28,800.00 $ 1,894.74 $ 61.39 $ 94.74 600 $ 28,800.00 $ 11,368.42 $ 80.34 $ 94.74Related Questions
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