A Product Is Currently Made in a Process-Focused Shop, Where

question 49

Essay

A product is currently made in a process-focused shop, where fixed costs are $8,000 per year and variable cost is $40 per unit. The firm currently sells 200 units of the product at $200 per unit. A manager is considering a repetitive focus to lower costs (and lower prices, thus raising demand). The costs of this proposed shop are fixed costs = $24,000 per year and variable costs = $10 per unit. If a price of $80 will allow 400 units to be sold, what profit (or loss) can this proposed new process expect? Do you anticipate that the manager will want to change the process? Explain.

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Definitions:

Rotation

The act or process of spinning around an axis or center point.

Biaxial Joint

A type of synovial joint that allows movement in two planes, for example, the wrist or the ankle joints.

Ball and Socket

A type of synovial joint where a spherical head fits into a cup-like socket, allowing multi-directional movement and rotation.

Atlas

The first cervical vertebra, supporting the skull and facilitating its range of motion.