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22 votes
22 votes
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.

User Rowan Gontier
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2 Answers

14 votes
14 votes

Answer: 208,000

Explanation:

round it to the nearest thousand

User Kuhu
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2.7k points
23 votes
23 votes

Answer:

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.

User DoubleVoid
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