Information About Hinze Corporation Is as Follows -Refer to the Figure

question 116

Multiple Choice

Information about Hinze Corporation is as follows:
$$\begin{array} { l r r } &20 \times 1&20 \times 2\\\text { Output (urits) } & 40,000 & 42,000 \\\text { Selling price per unit } & \$ 25 & \$ 25 \\\text { Input quantites: } & & \\\text { Materials (kg) } & 2,000 & 2,000 \\\text { Labour (hours) } & 1,600 & 1,625 \\\text { Input prices: } & & \\\text { Materials (per kg) } & \$ 5.00 & \$ 5.50 \\\text { Labour (per hour) } & 500 & \$ 7.50\end{array}$$
-Refer to the figure.By how much did profits change as a result of changes in productivity related to materials?

• A)$550.00 decrease
• B)$550.00 increase
• C)$312.50 decrease
• D)$312.50 increase

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Definitions:

Average Cost

Average cost, also known as unit cost, is the total cost of production divided by the number of units produced.

Maximize Profits

A business goal to achieve the highest possible profit by optimizing sales revenue and minimizing costs.

Constant Marginal

Pertains to a situation where the additional cost or benefit of producing one more unit of a good or service remains unchanged.

Average Cost

The sum of all production expenses divided by the amount of product made.