Question

Karla's candle factory is considering two different machines. machine a is highly automated with fc of $25,000 and vc of $.1/candle. machine b is actually no machine but rather hand labor with fc of $10,000 and vc of $.5/candle. if demand for karla's candles is 25,000, which machine should she pick? (2 marks for calculating and correct answer for a, 2 marks for calculating and correct answer for b, 1 mark for correct recommendation)

Answer 1

Karla would pick option (B) uses hand labor with fixed costs of $10,000 and variable costs of $.5/candle.

What is manufacturing?

• Manufacturing is the process of creating or producing items using equipment, labor, machines, tools, and chemical or biological processing or formulation.
• It is the essence of the economy's secondary sector.
• The phrase can relate to a wide range of human activities, from handcraft to high-tech, but it is most usually applied to industrial design, which involves the transformation of raw materials from the primary sector into finished commodities on a big scale.

To find which option will Karla pick:

• If the demand for Karla's candles is 25,000.
• Total Cost in Machine A = 25000 + 0.1*25000
• = $ 27500 Total

Therefore, Karla would pick option (B) uses hand labor with fixed costs of $10,000 and variable costs of $.5/candle.

Know more about manufacturing here:

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The correct question is given below:

Karla's candle factory is considering two different manufacturing options.

Option A is highly automated with fixed costs of $25,000 and variable costs of $.1/candle.

Option B uses hand labor with fixed costs of $10,000 and variable costs of $.5/candle.

If the demand for Karla's candles is 25,000, which option should she pick?