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1 June, 11:23

A product may be made using machine I or machine II. The manufacturer estimates that the monthly fixed costs of using machine I are $18,000, whereas the monthly fixed costs of using machine II are $15,000. The variable costs of manufacturing 1 unit of the product using machine I and machine II are $10 and $20, respectively. The products sell for $50 each. What is the maximum profit if the projected sales are 650 units

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  1. 1 June, 11:42
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    maximum profit is $8000 if sales from machine 1

    Explanation:

    given data

    monthly fixed costs machine 1 = $18000

    monthly fixed costs machine 2 = $15000

    variable costs by machine 1 = $10

    variable costs by machine 2 = $20

    products sell = $50 each

    to find out

    What is the maximum profit if the projected sales are 650 units

    solution

    we consider here no of machine sold = x

    and we know total Cost = Fixed Cost + Variable Cost

    so for machine 1 cost = 18000 + 10x

    for machine 2 cost = 15000 + 20x

    here x we have given 650 machine sold so

    for machine 1 cost = 18000 + 10 (650) = $24500

    for machine 2 cost = 15000 + 20 (650) = $28000

    we know products sell for $50 each

    so earn for 650 = $32500

    so profit from machine 1 = $32500 - $24500 = $8000

    so profit from machine 2 = $32500 - $28000 = $4500

    so maximum profit is $8000 if sales from machine 1
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