Question

A car manufacturing firm wishes to introduce a new line of tires into its product range. It costs them $50,000 to introduce the new line, and $1.20 per tire. If they have a budget of $300,000 to introduce the new line, how many tires can they make? Give your answer to the nearest thousand.

Answer 1

Answer: 208,000

Explanation:

round it to the nearest thousand

Answer 2

208333 tires can be made with a budget of $ 300000.

Explanation:

The total budget (
`C`), in monetary units, is the sum of fixed costs (cost of introducing the new line) (
`C_(o)`), in monetary units, and variable costs (cost of producing tires) (
`C_(v)`), in monetary units:

`C = C_(o) + C_(v)` (1)

If we know that
`C = \$\,300000` and
`C_(o) = \$\,50000`, then variable costs are:

`C_(v) = C-C_(o)`

`C_(v) = \$\,300000 -\$\,50000`

`C_(v) = \$\,250000`

And the variable cost can be defined by the following formula:

`C_(v) = r\cdot n` (2)

Where:

`r` - Production cost of a tire, in monetary units per tire.

`n` - Amount of produced tires, in tires.

If we know that
`C_(v) = \$\,250000` and
`r = \$\,1.20\,(1)/(tire)`, then the amount of produced tires:

`n = (C_(v))/(r)`

`n = (\$\,250000)/(\$\,1.20\,(1)/(tire) )`

`n = 208333\,tires`

208333 tires can be made with a budget of $ 300000.