Question

Estimate the production cost for a single product you may have purchased. Try costing a product with fewer than 10 components, such as a pen, pocket knife or baby toy. Remember that one reasonable upper bound for your estimate, including overhead, is the wholesale price, typically 40-70% of the retail price.

Answer 1

The production cost for a single product with fewer than 10 components, such as a pen or pocket knife, we can look at the average cost of production for similar products. Based on the information provided, the production cost could be estimated to be within the range of $4 to $12.

Step-by-step explanation:

The question is asking us to estimate the production cost for a single product with fewer than 10 components, such as a pen, pocket knife, or baby toy. One way to estimate the production cost is by looking at the average cost of production for similar products.

For example, in Figure 7.9, it shows that the average cost of producing an alarm clock decreases as the quantity of output rises. A small-sized factory with an output of 1,000 has an average cost of $12 per alarm clock, while a medium-sized factory with an output of 2,000 has an average cost of $8 per alarm clock, and a large factory with an output of 5,000 has an average cost of $4 per alarm clock.

Based on this information, we can estimate that the production cost for a single product, such as a pen or pocket knife, could be within the range of $4 to $12, depending on the size of the factory and the quantity of output.