EGG 307 Sample Exam 1 Solutions

# EGG 307 Sample Exam 1 Solutions - University of Nevada Las...

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University of Nevada Las Vegas EGG 307: ENGINEERING ECONOMICS Sample Exam No. 1 (Closed Book/Notes – 2 pages of formulae allowed) Duration: 75 minutes Instructions : Please attempt all four questions using both sides of the exam paper provided. Read the questions carefully and show your work clearly . Full credit to any part of a question will be given only if all the necessary steps are clearly shown and the answer is correct. Unless stated otherwise, all periodic cash flows occur at end-of-period. Use of cash flow diagrams will significantly help you in interpretation and understanding of the questions . GOOD LUCK !! Qu. 1 (25 points) A toy manufacturing factory pays each of its 20 production workers \$50 per day and \$2 for each toy the worker produces. Additional costs of production include \$13 per toy for raw materials and \$500 per day for overhead costs. (a) What are the variable and daily fixed costs of production? (b) The unit price of the toys is given as P = 95 – 0.1Q, where P = price per toy and Q is the quantity of toys produced per day. If the company can sell all the toys produced, how many should they produce to maximize the total profit from sale of the toys? What will be the price of each toy and the total profit? (c) Recent labor negotiations have forced the management to double the workers’ pay to \$4 per toy. Should the factory increase the quantity of toys produced per day in order to offset the apparent increase in labor

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## This note was uploaded on 07/13/2009 for the course EGG a taught by Professor Dr.kaseko during the Spring '09 term at University of Nevada, Las Vegas.

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EGG 307 Sample Exam 1 Solutions - University of Nevada Las...

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