Question Completion:
Toshovo computer data
Plant 1 Plant 2 Plant 3 Plant 4
Plant fixed cost $6,000,000 $5,000,000 $3,000,000 $2,000,000
Cost per computer $1,000 $900 $800 $750
Capacity 15,000 10,000 12,000 8,000
Answer:
Toshovo Computer
Toshovo can maximize its yearly profits from computer production by producing at full capacity at Plants 4, 3, and 2. At Plant 1, it should produce only 10,000.
It can also decide to double its capacity at Plants 4 and 3 and eliminate its Plants 1 and 2 with high fixed costs.
Explanation:
a) Data and Calculations:
Estimated number of computers per year = 40,000
Price per computer = $1,500
Toshovo computer data
Plant 1 Plant 2 Plant 3 Plant 4
Plant fixed cost $6,000,000 $5,000,000 $3,000,000 $2,000,000
Cost per computer $1,000 $900 $800 $750
Fixed cost per unit 400 500 250 250
Total costs per unit $1,400 $1,400 $1,050 $1,000
Selling price per unit $1,500 $1,500 $1,500 $1,500
Profit per unit $100 $100 $450 $500
Capacity 15,000 10,000 12,000 8,000
Plants Units to be Profit
Produced Per Unit
Plant 1 8,000 $500
Plant 2 12,000 $450
Plant 3 10,000 $100
Plant 4 10,000 -$100
Total produced 40,000
