Laboratory Testing, Inc. provides routine drug tests for employers in the Los An
ID: 1245435 • Letter: L
Question
Laboratory Testing, Inc. provides routine drug tests for employers in the Los Angeles metropolitan area. Tests are supervised by skilled technicians using equipment produced by two leading competitors in the medical equipment industry. Records for the current year show an average of 24 tests per hour performed on the A-1, and 51 tests per hour on a new machine, the Caltec. The A-1 is leased for $16,000 per month, and the Caltec is leased at a rate of $34,000 per month. On average, each machine is operated 25 eight-hour days per month. Labor and all other costs are fixed. A price of $5 is charged by Laboratory Testing for each test. ***Please show ALL work*** A) Calculate monthly MP of both the A-1 and Caltec. (Hint assume MP = AP, number of tests done per month) MPA-1 = MPCALTEC = B) For the output level they are producing each month is Laboratory Testing, Inc., using an optimal mix of testing equipment? Be sure to show why or why not. C) Calculate monthly MRP of both the A-1 and Caltec. MRPA-1 = D) At a price of $5 per test should the company lease more machines? Be sure to show the work supporting your answer.Explanation / Answer
yes, this is an optimal mix of testing machines, because the last dollar spent on each machine increased output by the same number of units.
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