Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Microeconomics Expert

Weston Industrial Manufacturing Products ("WIMP") has the capability to produce a variety of industrial products, including a number of types of widgets. In the past, WIMP has manufactured 2 different types of widget (Type A and Type B). Each of these is sold in a market that approximates a perfectly competitive market. Production is limited to standard shifts operating Monday through Friday due to a contract with the relevant labor union.

The average labor rate is $10 per hour and the company currently employs 10 laborers who work a single 8-hour shift each day. The company employs several salaried marketing and administrative employees. The following table provides price and cost data collected from the accounting department:

WIMP: Per-Unit Price and Cost Data by Widget Type

 

Type A

Type B

Gizmo Widget

Price

100

90

See marketing estimates

 

 

 

 

Labor

40

20

20

Materials

20

40

50

SGA

8

4

4

Depreciation

20

18

40

 

 

 

 

WIMP has recently developed a new widget, the "Gizmo Widget." The Gizmo Widget is designed to serve a niche demand segment in the manufacturing industry. Labor costs are relatively low but this is partially offset by higher materials costs.

The company recently upgraded machinery to enable the Gizmo Widget to be produced and this is reflected in higher depreciation charges. WIMP's marketing staff produced the following sales projections regarding the Gizmo Widget:

Price

Projected Weekly Sales (# units)

180

50

160

90

140

120

120

140

100

160

80

170

In the short run, WIMP cannot add to its labor force of ten employees and consequently there are only 80 labor hours available per day to allocate toward widgets.

1.      Which costs in the table of accounting information are relevant for making short-run economic decisions regarding the production mix of widgets? Explain and show.

2.      Ignore the Gizmo Widget for the moment. How should WIMP be allocating production between the Type A and Type B widgets?
Be sure to briefly explain your approach/reasoning.

3.      What is the profit maximizing number of Gizmo Widgets that should be introduced? Be sure to account for the fact that Gizmo Widgets displace other types of widgets. Again, be sure you provide a brief explanation of your approach/reasoning.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9523452

Have any Question?


Related Questions in Microeconomics

Question suppose that the table presented below represents

Question: Suppose that the table presented below represents production and cost data from a single firm. The table displays the level of labor (L) and capital (K) chosen by the firm in each year from 2009-2017, along wit ...

Q 1 what is the difference between micro and macro

Q. 1. What is the difference between micro and macro economics? Give an example of a microeconomic phenomenon and an example of a macroeconomic one.

Question say that the interest rate is 8 if you invest 200

Question: Say that the interest rate is 8%. If you invest $200 today and then another $300 in exactly one year, what is the total future value of these investments two years from today? The response must be typed, single ...

Question how would the reduction in the number of immigrant

Question: How would the reduction in the number of immigrant workers affects the economy in the short-term (Use IS-LM framework and graphs) The response must be typed, single spaced, must be in times new roman font (size ...

Question here are annual values for m2 and for nominal gdp

Question: Here are annual values for M2 and for nominal GDP (all figures are in billions of dollars) for the mid-2000s. Year M2 Nominal GDP 2003 6,055.5 $10,960.8 2004 6,400.7 11,685.9 2005 6,659.7 12,421.9 2006 7,012.3 ...

Question write a brief essay minimum 250 words on the

Question: Write a brief essay (minimum 250 words) on the following: You've read about the price elasticity of demand. Much as the price elasticity of demand applies to products, it can also be applied to individual brand ...

Question 1is it to an employees advantage to enjoy the

Question: 1.Is it to an employee's advantage to enjoy the lower turnover rates that unionization seems to include? provide specific example 2. Why are union officials likely to oppose flexible work hours and other innova ...

Question armed conflicts and wars cause destruction of

Question: Armed conflicts and wars cause destruction of infrastructures, businesses, and mass displacement of population. Use Aggregate Demand/Aggregate Supply (AD/AS) model to depict the impact of armed conflicts on the ...

Question a manager is considering two technological lines

Question: A manager is considering two technological lines to produce candies. The first one requires $1 million in initial investment and produces 150 kilograms (kg) of candies per day. The second one requires $1.3 mill ...

Question economies around the world are becoming

Question: Economies around the world are becoming increasingly globalized. How does this globalization affect the choices you face in your economic decisions? Do the effects change if you think of yourself as a consumer ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As