Develop a plot of the average cost per unit versus production quantity for the houseware appliance assembly department of Ace-One, Inc., that has a fixed cost of $160,000 per year and a variable cost of $4.00 per unit; use it to answer the following questions. (a) At what quantity is a $5 per unit average cost justified? (b) If the fixed cost increases to $200,000, plot the new curve on the same graph and estimate the quantity that justifies an average cost of $6 per unit.
Develop a plot of the average cost per unit versus production quantity for the houseware appliance assembly department of Ace-One, Inc., that has a fixed cost of $160,000 per year and a variable cost of $4.00 per unit; use it to answer the following questions. (a) At what quantity is a $5 per unit average cost justified? (b) If the fixed cost increases to $200,000, plot the new curve on the same graph and estimate the quantity that justifies an average cost of $6 per unit.
Chapter6: Proudction Costs
Section: Chapter Questions
Problem 8SQP
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Question
Develop a plot of the average cost per unit versus
production quantity for the houseware appliance
assembly department of Ace-One, Inc., that has a
fixed cost of $160,000 per year and a variable cost
of $4.00 per unit; use it to answer the following
questions.
(a) At what quantity is a $5 per unit average cost
justified?
(b) If the fixed cost increases to $200,000, plot the
new curve on the same graph and estimate the
quantity
that justifies an average cost of $6 per unit.
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