A bicycle component manufacturer produces hubs for bike wheels. Two processes are possible for manufacturing. Assume that the daily demand for hubs allows all defect-free hubs to be sold. Additionally, tested or rejected hubs cannot be sold. Find the process that maximizes profit per day if each part is made from $4 worth of material and can be sold for $32. Both processes are fully automated, and variable overhead cost is charged at the rate of $42 per hour. Production rate Daily production time Percent of parts rejected based on visual inspection Process 1 36 parts/hour 4 hours/day 21% The profit per day for Process 1 is $[ (Round to the nearest cent.) Process 2 15 parts/hour 7 hours/day 9%

A bicycle component manufacturer produces hubs for bike wheels. Two processes are possible for manufacturing. Assume that the daily demand for hubs allows all defect-free hubs to be sold. Additionally, tested or rejected hubs cannot be sold. Find the process that maximizes profit per day if each part is made from $4 worth of material and can be sold for $32. Both processes are fully automated, and variable overhead cost is charged at the rate of $42 per hour. Production rate Daily production time Percent of parts rejected based on visual inspection Process 1 36 parts/hour 4 hours/day 21% The profit per day for Process 1 is $[ (Round to the nearest cent.) Process 2 15 parts/hour 7 hours/day 9%

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Proudction Costs

Section: Chapter Questions

Problem 8SQP

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