Lilienthal Products Inc

question 20

Multiple Choice

Lilienthal Products Inc. makes two products-M38O and E34G. Product M38O's selling price is $145.00 and its unit variable cost is $87.00. Product E34G's selling price is $300.00 and its unit variable cost is $210.00. The monthly demand is 1,590 units for product M38O and 640 units for E34G. The constrained resource is a particular machine that is available for 10,100 minutes each month. Each unit of product M38O requires 5 minutes on this machine and each unit of product E34G requires 10 minutes on this machine.
-How many units of product E34G should be produced each month?

• A) 0
• B) 1,435
• C) 640
• D) 215

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Definitions:

Marginal Cost Curve

The marginal cost curve graphically represents how the cost of producing one additional unit of a good changes as production volume varies.

Marginal Product

The increased output achieved by adding one more unit of a certain input, with all other inputs held steady.

Marginal Cost

The cost of producing one additional unit of a good or service, used in decision-making on production levels.

Average Total Cost

The average cost per unit of output expressed as the total production cost divided by the number of units produced.