Question

Using existing plant and equipment, Priceless Moments Figurines can be manufactured using plastic, clay, or any combination of these materials. A figurine can be manufactured by F = 4P + 2C, where P is pounds of plastic and C is pounds of clay. Plastic costs $2 per pound and clay costs $5 per pound. What would be the lowest cost of producing 40,000 figurines? a. $20,000 b. $100,000 c. $60,000 d. $10,000

Answer 1

a) 20,000

Step-by-step explanation:

F = 4P + 2C, where P is pounds of plastic and C is pounds of clay. Plastic costs $2 per pound and clay costs $5 per pound.

4P + 2C = 60000 units

Now suppose only plastic is used.

so C=0 and we get 4 P = 40000

i.e P = 10000 pounds of plastic to produce 40000 figurine...

COST = 2 P + 5 C

In this case, its only 2 P

i.e 2 x 10000 = $20000

Now suppose only clay is used.

so P=0 and we get 2 C = 40000

i.e C = 20000 pounds of clay to produce 40000 figurine...

COST = 2 P + 5 C

In this case, its only 5 C

i.e 5 x 20000 = $100000

Hence least cost is $20,000 by using only clay to produce 40,000 figurines