Modern Inc

question 35

Multiple Choice

Modern Inc.manufactures low-cost tables at a processing cost of $80 per table.The company produces 100 units per day and averages 90% good quality resulting in 10% defective items.Fifty percent of the defective units are reworked prior to shipment to Modern's distribution center.The rework cost is $10 per unit. If the production cost is decreased to $70 the quality productivity ratio (QPR) is

• A)approximately 1.15.
• B)approximately 1.25.
• C)approximately 1.35.
• D)approximately 1.45.

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Definitions:

Total Cost Function

A formal expression illustrating the total cost of production as the sum of fixed and variable costs.

Inverse Demand Function

A mathematical function that expresses the price of a good as a function of the quantity demanded, showing the relationship between price and quantity from the demand perspective.

Marginal Costs

The escalation in cumulative costs incurred by manufacturing an additional unit of a good or service.

Linear Demand Curve

A graphical representation showing a straight-line relationship between the price of a good and the quantity demanded.