A Company Manufactures Two Products, a and B

question 74

Multiple Choice

A company manufactures two products, A and B. If x is the number of thousands of units of A and y is the number of thousands of units of B, then the cost and revenue in thousands of dollars are ​ ​
Find the number of each type of product that should be manufactured to maximize profit.
​

• A)3,000 units of product A 48,000 units of product B
• B)6,000 units of product A 24,000 units of product B
• C)12,000 units of product A 12,000 units of product B
• D)3,000 units of product A 12,000 units of product B
• E)12,000 units of product A 48,000 units of product B

Distinguish between different types of goods based on income elasticity and cross-price elasticity.

Apply utility theory in decision-making based on income changes and costs.

Analyze the impact of income changes on market demand for a product.

Understand the effect of complementary and substitute goods on market demand.

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Definitions:

First-In, First-Out

An inventory valuation method that assumes goods or materials purchased first are sold or used first.

Conversion Costs

Costs incurred to convert raw materials into finished products, including direct labor costs and manufacturing overhead.

FIFO Method

An inventory valuation method that assumes the first items placed into inventory are the first sold; stands for "First In, First Out."

Direct Materials Cost

The cost of raw materials used in manufacturing a product that are directly traced to that product.