Question

The Sydney Morning Therald Coca-Cola Amatil to close South Australia plant, cut 180 jobs Patrick Hatch Published: February 22, 2017 10:43AMM Coca-Cola Amatil will close its manufacturing plant in South Australia, cutting about 180 jobs, and shift the work to Queensland as part of a $90 million supply chain restructure. As part of its profit announcement on Wednesday, the beverage giant said it had reviewed its operations across Australia and concluded it should increase production in Queensland and Western Australia and close its plant in the Adelaide suburb of Thebarton. r development of our facility at Thebarton in South Australia was constrained by its CBD location, site layout, dated infrastructure and ex logistics," CCA's managing director Alison Watkins said in a statement. "This isn't a decision we have taken lightly, but we know it will be important for ensuring our position in the market into the future." The company unveiled underlying pre-tax profit of $417.9 million for the half year up 6.2 per cent. Investors welcomed the news sending CCA's share price up almost 7 per cent to $10.60 in early trade The Adelaide factory produces glass bottles, fruit juice, dairy products and some alcoholic beverages and Ms Watkins said CCA would provide financial counselling and help find new jobs for workers affected by the 180 lost jobs. Existing administrative, distribution, and recycling work would remain in South Australia, she said. CCA will spend $90 million building a new glass production line and juice and dairy production capacity at its plant in Richlands, on Brisbane's outskirts, in addition to the $75 million investment announced last year, the company said. The Richlands plant will have lower operating costs, in part due to greater automation. Some manufacturing from Adelaide will shift to Kewdale in WA, Moorabbin in Victoria and Northmead in NSW, CCA said Shutting the Adelaide plant will save CCA S20 million a year from 2020, which would be reinvested in the business, CCA said. CCA made the strategic announcement as it reported a financial year The n full-year net profit on Wednesday morning, down from $403 million last company recorded a S171.8 million non-cash impairment charge against its troubled SPC tinned fruit and vegetable business. This story was found at: http://www.smh.com.au/businesslcocacola-amatil-to-close-south-australia-plant-cut- 180-jobs-20170222-guia3a.html Quantity Variable Total Cost Fixed CostCost Average AverageMarginal Workersof Fixed Cost Fixed Cost Cost Fixed Cost Variable Total Cost Cost Production 20 60 140 200 240 260 268 272 The table above shows the production and cost schedule for producing t-shirts. Each worker is paid $250 per day and the total fixed cost of capital is $1000. T-shirts can be sold at a local store for $15. a) Use this information to complete the table. (2 marks) b) How many workers should the firm hire to maximize the firm's profits? (1 mark) c) How many t-shirts will be produced at maximum profits? (1 mark) Suppose the price of t-shirts falls to $5. d) Explain how many t-shirts would be supplied in the short-run. (1 mark) e) Explain how many t-shirts would be supplied in the long-run.( 1 mark) Suppose that prices return to $15 and the workers take this is a sign to negotiate a pay rise to $350 per day. f) What will be the profit-maximising quantity of t-shirts if their negotiations are successful? (2 marks) Explain which of the cost curves will move and which will stay the same. (2 marks) g)

Answer 1

as per HomeworkLib policy abcd will anwer

FORMULAS USED FOR CALCULATION OF ANSWER

VC = WAGES * NUMBERS OF LABOR EMPLOYED

TR = PRICE * QUANTITY

MR = [TR_N - TR_N -1] [ Q_N -Q_N -1 ]

MC =[ TC -TC_N -1 ] [ Q_N -Q_N -1 ]

TC = FIXED COSTS + VARIABLE COST  

AFC =FC / Q , AVC =VC / Q , ATC =TC / Q

PROFIT = TR - TC AND PROFIT MAX QUALITY IS TAKEN WHERE MR = MC OR MR IS JUST GREATER THAN MC

WORKERS	QUANITY OF PRODUCTION	FIXED COST	VARAIABLE COST	TOTAL COST	AFC	AVC	ATC	MC	TR	MR	PROFIT
0	0	1000	0	1000							-1000
1	20	1000	250	1250	50	12.5	62.5	12.5	300	15	-950
2	60	1000	500	1500	16.7	8.3	25	6.25	900	15	-600
3	140	1000	750	1750	7.1	5.4	12.5	3.13	2100	15	350
4	200	1000	1000	1000	5	5	10	4.17	3000	15	1000
5	240	1000	1250	2000	4.2	5.2	9.4	6.25	3600	15	`1350
6	260	1000	1500	2250	3.8	5.8	9.6	12.5	3900	15	1400
7	268	1000	1750	2750	3.7	6.5	10.3	31.25	4020	15	1270
8	272	1000	2000	3000	3.7	7.4	11	62.5	4080	15	1080

160 T -SHIRTS WILL BE PRODUCED AND 6 WORKERS WILL BE EMPLOYED TO EARN A MAX POLICY OF 1400

IF PRICE FALLS TO $5

FROM THE ANOVE DIAGRAM WILL BE SAME JUST MR TR PROFIT WILL CHANGE

TR	MR	PROFIT
0		-1000
100	5	-1150
300	5	-1200
700	5	-1050
1000	5	-1000
1200	5	-1050
1300	5	-1200
1340	5	-1410

1360 5 -1640

THE PRICE OF $5 EQUAL THE MIN AVC OF $5 WHICH IS A SHUTDOWN POINT Q^X = 200 UNITS THE FIRM WILL HAVE AN OPTION EITHER CONTINUE OR SHUT DOWN OPERATIONS THE FORM IS JUST ABLE TO COVER VARIABLE COSTS

IN THE LONG RUN THE PRICE WOULD BE EQUAL TO MIN ATC = 89.4 AT Q = 240 UNITS