The manufacturer of an electronics product finds it necessary to keep a 10-day supply of memory chips on hand. The chips in his inventory were purchased at $5 per chip, but over the weekend, the price of these chips has increased to $6 per chip. Other materials costs for this electronics product are $3, and the labour costs for assembling the product are $4. What are the manufacturer’s variable costs for the products that he will be manufacturing during this coming week?

Question

BlackTom AI · Accepted Answer

To determine the manufacturer’s variable costs for the products he'll manufacture during the coming week, we need to sum the variable cost components per unit of product.
First, identify the relevant costs that vary with production: the memory chip cost, other materials cost, and labor cost per unit.
- The memory chips are now priced at $6 per chip. If we assume one chip is required per finished unit, the memory-chip cost per unit is $6.
- Other materials costs for each unit are $3.
- Labour costs for assembling each unit are $4.
Adding these per-unit variable costs together gives: 6 (memory chips) + 3 (other materials) + 4 (labour) = 13.
Option-by-option analysis:
- $8: This would imply some reduction in one of the components, which is inconsistent with the stated current costs (6 for chips, 3 for other materials, 4 labour) unless there were provided discounts or allocations, none of which are given.
- $9: This would suggest a partial inclusion of costs, such as excluding labour or using a reduced chip cost, neither of which matches the given data.
- $12: This would arise if perhaps one component was missed (e.g., $6 + $3 + $3) or if one cost was discounted, but the labor cost is specified as $4, not $3.
- $10: This would ignore either the full $6 chip cost or part of the other costs, which isn’t supported by the data.
- $13: This correctly sums the current per-unit costs: $6 for memory chips + $3 for other materials + $4 for labour = $13.
Thus, the correct interpretation leads to a per-unit variable cost of $13 for the products to be manufactured during the coming week.

MGT355H5 F LEC0101 Term Test 1

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