This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: = 50 shadow price on constraint 4 Marginal cost MC 1 = 550 MC 2 = 450 C(q;P) = 60,000 + (5/4)q 1 2 + 2q 2 2 + 50(q 1 + q 2 ) K L 1 L 2 B Costs: [Indirect] [Direct] [Period] Total Cost, substituting C(q;P) = 60,000 + (5/4)200 2 + 2q 2 2 + 50(200 + q 2 ) q 1 = 200, q 2 = 100 = 60,000 + 50000 + 2*100 2 + 50(300) = 145,000 Allocate Indirect Cost (60,000) to products in proportion to direct labor: Product 1 60000 * 50000/( 50,000+20,000) = 42857 1/7 Product 2 60000 * 20000/( 50000+20000) = 17,142 6/7 Total 60,000 Calculate Unit Cost: Product 1 Product 2 Labor 50,000 20,000 K 42,857 1/7 17,142 6/7 92,857 1/7 37,142 6/7 Unit Cost (divide by q 1 = 200) (q 2 = 100) 464 2/7 371 3/7 Recall MC 550 450 If youre not satisfied with this cost, you could have added the $50/box to the unit cost. Product 1 Product 2 464 2/7 371 3/7 50 50 . 514 2/7 421 3/7 Closer to MC ~6% ~5%...
View
Full
Document
This note was uploaded on 02/16/2010 for the course ACCT 212 taught by Professor Tomassini during the Summer '09 term at Ohio State.
 Summer '09
 TOMASSINI

Click to edit the document details