(4a). Prius gets 46 miles per gallon. But it costs $25,000. Focus gets 29 miles
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Question
(4a). Prius gets 46 miles per gallon. But it costs $25,000. Focus gets 29 miles per gallon, and costs $18,000. When gasoline costs $4 per gallon, what is the breakeven number of miles for the two cars (that is, at what number of miles would the total cost, which is purchase cost plus fuel cost, for the two be equal)? (b). A production line makes cameras. In a day (8 working hours), 200 cameras are made, and they are sold at S 302 each. 20 workers attend the line, and they are paid $20 an hour. The material cost is $ 63 per camera. The cost of capital for the plant is $5,000 a day. What is the multifactor productivity (using all the given factors)? (Provide two significant digits to the right of the decimal point)Explanation / Answer
(4a).
Prius
Purchase Cost = $25,000
Cost of fuel per mile = ($4/46 miles)
Focus
Purchase Cost = $18,000
Cost of fuel per mile = ($4/29 miles)
Let n be the number of miles at which the sum of purchase cost and fuel cost for both Prius and Focus becomes equal.
Therefore, the equation would look like
25000 + 4n/46 = 18000 + 4n/29
Hence, the breakeven number of miles for the cars is 137,323.53 miles.
(b).
Production line makes camera.
Given, in a day (8 working hours), 200 cameras are made
Selling price of each camera = $302
Total Revenue (Output) = $302*200 = $60,400
Given, 20 workers attend the line and are paid $20 an hour
Therefore,
Labour Cost = $20*8*20 = $3,200
Material Cost = $63*200 = $12,600
Cost of Capital for the plant = $5,000
Total Cost (Input) = $3,200 + $12,600 + $5000 = $20,800
Hence,
Multifactor Productivity = Total Revenue / Total Cost = $60400/$20800 = 2.90
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