Answer the Following Questions Using the Information Below:
Axle and Wheel

question 292

Multiple Choice

Answer the following questions using the information below:
Axle and Wheel Manufacturing currently produces 1000 axles per month.The following per unit data apply for sales to regular customers:
$\begin{array}{lr}\text { Direct materials } & \$ 30 \\\text { Direct manufacturing labour } & 5 \\\text { Variable manufacturing overhead } & 10 \\\text { Fixed manufacturing overhead } & \underline{40} \\{\text { Total manufacturing costs }} & \$ 85\end{array}$
-The plant has capacity for 2000 axles and is considering expanding production to 1500 axles.What is the total cost of producing 1500 axles?

• A)$170 000
• B)$85 000
• C)$107 500
• D)$102 500

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Definitions:

Profit-maximizing Behavior

An economic principle where businesses seek to achieve the highest possible profit from their operations.

Short-run Production Function

The short-run production function describes the relationship between input and output levels when at least one input (like capital) is fixed and cannot be changed immediately.

Variable Factor

An input in the production process that can be changed in the short term to influence output.

Fixed Factors

Inputs in the production process that cannot be easily increased or decreased in the short term, such as machinery or land.