Casting production Total Cost per hour Selling price per per hour casting 100 $20.00 200 $17.00 300 $16.00 400 $15.00 500 $14.50 $1,000 $2,600 $3,200 $3,900 $4,700

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter5: Process Costing
Section: Chapter Questions
Problem 7MC: What is the cost of direct labor f the conversion costs are $330.000 and manufacturing overhead is...
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 A recent engineering was given the job of determining the best production rate for a new type of casting in a foundry. After experimenting with many combinations of hourly production rates and total production cost per hour, he summarized his findings in table below (column 2). The engineering then talked to the firm’s marketing specialist, who provided estimates of selling price per casting as a function of production output (see table 1 column 3). There are 8,760 hours in a year. What production rate would you recommend to maximize total profits per year?  a) 100 ; b) 200 ;  c) 300 ;   d) 400 ;  e) 500 Show your complete solution and computation.
Casting production Total Cost per hour
per hour
100
200
300
400
500
$1,000
$2,600
$3,200
$3,900
$4,700
Selling price per
casting
$20.00
$17.00
$16.00
$15.00
$14.50
Transcribed Image Text:Casting production Total Cost per hour per hour 100 200 300 400 500 $1,000 $2,600 $3,200 $3,900 $4,700 Selling price per casting $20.00 $17.00 $16.00 $15.00 $14.50
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