A company will manufacture a total of 10,000 units of its products at plants A and...
A company will manufacture a total of 10,000 units of its products at plants A and B. Available data are as follows:
| Plant A | Plant B | |
| Variable cost per item | $6 | $6.50 |
| Fixed cost | $40,000 | $35,000 |
The company decided to spend no more than $137,500 for total costs. What is the maximum number of units that must be produced at Plant B?
Homework Answers
Total units = 10,000
Let, Units produced for Plant A = a
then, Units produced for plant B = 10000-a
Cost for plant A = $40,000 + $6*a
Cost for plant B = $35,000 + $6.50*(10,000-a)
40,000+6a+35,000+65000-6.5a = 137500
140000-0.5a = 137500
a = 5,000 units
Maximum number of units that must be produced at Plant B = 10000-5000 = 5000 units
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