Use the Following Data for the Next 2 Questions

question 76

Multiple Choice

Use the following data for the next 2 questions:
A manufacturer operating with excess capacity has been asked to fill a special order at $7.25 per unit. The regular price is $10 per unit. No other use of the currently idle capacity can be found. The manufacturer's usual variable costs per unit are $3.50 for direct materials, $2.00 for direct labor, $1.00 for variable overhead, and $0.50 for sales commission. No sales commission would be paid on this special order. The average fixed overhead cost per unit is $0.25.
-Tyke, Inc. produces 2 products A and B, each requiring direct material and labor. Total labor available is 200 hours, and 300 pounds of material. Each unit of A sells for $10, and B sells for $15. Given the following linear programming information: What are the variable costs per unit for A and B?

• A) $4 and $15
• B) $14 and $19
• C) $6 and $10
• D) $7 and $14

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Definitions:

Competitively Organized

Referring to markets or industries where multiple firms exist in competition with one another, ensuring no single entity controls the market prices or supply.

Economic Profits

Profits that exceed the opportunity costs of all inputs, considering both explicit and implicit costs.

Economic Consultant

A professional who provides expert advice on economic strategies, market analysis, policy formulation, and financial planning to businesses or governments.

Short Run

An economic duration where a minimum of one factor, like the size of a facility, remains constant and unchangeable.