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# Cost Accounting: calculate units of labor and output for automobile wheel locks

See the attached file.

I am having a problem with the following analysis:

You own a small manufacturing company that makes wheel locks for automobiles that you sell to the major automakers. A company recently completed a study of your production process, and a part of the results is displayed in the attached file. As can be seen in the file, you own and employ 5 units of capital in your production process. In addition, capital costs you \$5/unit, labor costs \$50/unit, and you sell your wheel locks for \$5/unit. To keep the analysis manageable, assume your only fixed costs are capital, and your only variable costs are labor.

- What goes in the last 2 columns of the table.
- How many units of labor should you employ? Explain.
- How many units of output should you produce to maximize your profits? Explain.
- If you do maximize profits, how much is your profit or loss? Why?

#### Solution Summary

In an Excel format, the solution expands the schedule and explains the calculations to provide the answers.

\$2.19