FESTO Manufactures Questions

FESTO Manufactures Questions

Answer of FESTO Manufactures Question for $2 Only (Instant Download)

FESTO manufactures solenoids widely used in automation equipment. In order to set up the manufacturing plant, the company estimated the monthly fixed costs due to capital recovery and machinery to be RM 75,000 and variable costs estimated at RM75 per unit. The selling price per unit is dependent on demand and estimated to be reduced when more units are being produced as given by p= 200 – 0.05D, where D is the demand/production rate. a) If the production rate (assumed to be equal to demand D) is 2,500 units per month, determine the company’s profits. b) Determine the optimal production rate (assumed to be equal to demand D) to maximize profit. c) Determine the range of production within which the operation is still profitable. (30 marks)

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