The TEXAS Six Shooter company manufactures expensive 45 caliber revolver pistols

Question

The TEXAS Six Shooter company manufactures expensive 45 caliber revolver pistols, It plans to meet all of its projected demand (given below for the next year by quarter). The firm plans to use a constant quarterly production rate. Production costs are $20,000 per unit and holding costs are $2,000 per quarter per unit. Upcoming quarterly demand(Q1, Q2, Q3, Q4) is anticipated to be 200, 300, 400, and 300 units. Determine the Firms Production Cost. O $24,000,000 $20,000 O $1200 $9.99 but wait there's more. If you order now, they will throw in a free cookbook

Explanation / Answer

The firm's production cost = total demand × production cost per unit

= ( 200 + 300 + 400 + 300) × $20,000

= 1200 × $20,000

= $24,000,000

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