Question 3: A company producing electric panel boards is using the following pri
ID: 1163093 • Letter: Q
Question
Question 3: A company producing electric panel boards is using the following price-demand relationship: D- 1000-10 p. The company can produce 650 panel board only/month. The fixed Cost-$6000/month and the variable cost is $50/panel board. Calculate: a. What is the company's maximum profit/month? b. What is the company's range of profitable demand? Question 4: A machine capable of delivering 100 hp has been considered for the production of a part. Calculate the profit that this machine generates per day assuming the following: Material cost to produce one part Production rate (parts hour) Selling price per defect-free part Operators cost per hour Overhead costs per hour Percent parts rejected Electric power cost per kw-hr Machine efficiency $20 300 Hours available for production per day7 S50 $20 $10 5% $0.15 80% Note: I hp-0.746 kwExplanation / Answer
Q.3
a. Maximum Profit is $250 and at Q = 250, P = 75
b. The range of profitable demand Q is 210 to 290
P
D
FC
VC
TC
TR
Profit
0
1000
6000
50000
56000
0
-56000
10
900
6000
45000
51000
9000
-42000
20
800
6000
40000
46000
16000
-30000
30
700
6000
35000
41000
21000
-20000
40
600
6000
30000
36000
24000
-12000
50
500
6000
25000
31000
25000
-6000
60
400
6000
20000
26000
24000
-2000
70
300
6000
15000
21000
21000
0
71
290
6000
14500
20500
20590
90
72
280
6000
14000
20000
20160
160
73
270
6000
13500
19500
19710
210
74
260
6000
13000
19000
19240
240
75
250
6000
12500
18500
18750
250
76
240
6000
12000
18000
18240
240
77
230
6000
11500
17500
17710
210
78
220
6000
11000
17000
17160
160
79
210
6000
10500
16500
16590
90
80
200
6000
10000
16000
16000
0
81
190
6000
9500
15500
15390
-110
Q4.
Machine efficiency = 0.8*300 = 240
Parts rejected = 240*0.05 = 12
Total produced = 240-12 = 228
TC = FC+VC
FC = Operator costs+Overhead costs = 30
VC = machine produced + Electricity cost
= 228*7*20 + 100*0.746*0.15*7
= 31998.3
TC = 30+31998.3 = 32028.3
TR = 228*7*50 = 79800
Profit = TR-TC = 79800-32028.3 = $47771.7
P
D
FC
VC
TC
TR
Profit
0
1000
6000
50000
56000
0
-56000
10
900
6000
45000
51000
9000
-42000
20
800
6000
40000
46000
16000
-30000
30
700
6000
35000
41000
21000
-20000
40
600
6000
30000
36000
24000
-12000
50
500
6000
25000
31000
25000
-6000
60
400
6000
20000
26000
24000
-2000
70
300
6000
15000
21000
21000
0
71
290
6000
14500
20500
20590
90
72
280
6000
14000
20000
20160
160
73
270
6000
13500
19500
19710
210
74
260
6000
13000
19000
19240
240
75
250
6000
12500
18500
18750
250
76
240
6000
12000
18000
18240
240
77
230
6000
11500
17500
17710
210
78
220
6000
11000
17000
17160
160
79
210
6000
10500
16500
16590
90
80
200
6000
10000
16000
16000
0
81
190
6000
9500
15500
15390
-110
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