Crimson Wheels Bus Company Produces Buses

question 33

Multiple Choice

Crimson Wheels Bus Company produces buses. In order to produce the seats for the buses, special equipment must be set up. The setup cost per frame is $20. The cost of carrying seats in inventory is $5 per seat per year. The company produces 125,000 buses per year.
The number of seats that should be produced per setup in order to minimize the total setup and carrying costs is:

• A)1,920 seats.
• B)3,000 seats.
• C)1,000 seats.
• D)2,200 seats.