Consider the Scenario Given Below

question 29

Multiple Choice

Consider the scenario given below.Use Excel solver to answer the following question(s) .
Peca Inc.is a small manufacturer of two types of office chairs,the swivel and no-swivel models.The manufacturing process consists of two principal departments: fabrication and finishing.The fabrication department has 24 skilled workers,each of whom works 7 hours per day.The finishing department has 6 workers,who also work a 7-hour shift.A swivel type requires 7 labor hours in the fabricating department and 2 labor hours in finishing.The no-swivel model requires 8 labor hours in fabricating and 3 labor hours in finishing.Peca Inc.makes a net profit of $100 on the swivel model,and $130 on the no-swivel model.The company anticipates selling at least twice as many no-swivel models as swivel models.The company wants to determine how many of each model should be produced on a daily basis to maximize net profit.
-If two workers in the finishing department were ill for a day and could not report to work,the overall profit will reduce by ________.

• A)$1,260
• B)$315
• C)$180
• D)$630

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Definitions:

Marginal Cost (MC)

Marginal cost is the increase in total cost that arises from producing one additional unit of a product or service.

Marginal Revenue (MR)

The enhanced earnings from distributing an additional unit of a good or service.

Total Costs

The sum of all expenses incurred in the production of goods or services.

Purely Competitive

A market structure characterized by many buyers and sellers, free entry and exit, and a product that is homogeneous across suppliers, leading to price being determined by supply and demand.