A Dry Cleaner Currently Has 10 Workers and 4 Machines

question 73

Multiple Choice

A dry cleaner currently has 10 workers and 4 machines.The workers' wage rate is $300 per worker and the rental rate for a machine is $500.The last worker added 600 units to total output
And the last machine also added 600 units to total output,and the last machine also added 600 units to total output.If the dry cleaner uses 11 workers and 3 machines instead,then

• A)cost will be unchanged and output will increase by 300 units.
• B)cost will be unchanged and output will decrease by 200 units.
• C)output will be unchanged and cost will decrease by $500.
• D)output will be unchanged and cost will decrease by $200.
• E)none of the above

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Definitions:

Annual Cash Flow

The total amount of money being transferred into and out of a business, measured yearly.

Initial Cost

The acquisition cost of an asset or investment, which might include the purchase price and any other expenses necessary to get the asset ready for use.

Profitability Index

A financial tool used to measure the relative profitability of an investment project, calculated as the present value of future cash flows divided by the initial investment.

Required Rate

The Required Rate, often known as the required rate of return, is the minimum annual percentage earned by an investment that will induce individuals or companies to put money into a particular project or investment.