Answered: Cutting Tool ID Fixed Cost per Order…

Business

Economics

Cutting Tool ID Fixed Cost per Order Variable Cost per Unit СТ 1 $300 $9.00 СТ 2 $750 $3.00 СТ 3 $500 $5.00

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter8: Production And Costs

Section8.4: Costs Of Production: Total, Average, Marginal

Problem 1ST

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Question

Cowboy Metal Cutting produces a laser cut part based on customer orders. The number of units requested on a customer’s order for the laser cut part can vary from 1 unit to 150 units. Cowboy has determined that three different cutting machines can be used to produce this part. An economic analysis of production costs has produced the data in the table below. Solve, a. For all order sizes between 1 and 150, determine the preferred (most economical) cutting machine for an order of that size. b. For an order of size 75, what is the minimum cost production?

Cutting Tool ID Fixed Cost per Order Variable Cost per Unit
СТ 1
$300
$9.00
СТ 2
$750
$3.00
СТ 3
$500
$5.00

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