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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.