Smokey's Garage, Inc., provides routine auto diagnostics for customers in the Atlanta metropolitan area. Tests are supervised by skilled mechanics using equipment produced by two leading competitors in the autotest equipment industry. Records for the current year show that the monthly marginal product of Sunny Tune System (STS) is 800 tests per month and 1200 tests per month on the Car Care Tower System (CCT). The STS is leased for $8,000 per month (PSTS), and the CCT is leased at a rate of $12,000 per month (PCCT). Each routine diagnostic test is sold to customers for $15.
A. What is the MPSTS/ PSTS (the MPSTS divided by the PSTS)
B. What is the MPCCT/ PCCT (the MPCCT divided by the PCCT)
C. What is the MRTS between the CSS and the STS?
D. For the current monthly output are they using the least cost combination of the two machines?
E. What is the MRP of the STS?
F. What is the MRP of the CCS?
G. If Smokey wished to maximize profit is he using the optimal amount of STS or should he lease more or less of the STS?
H. If Smokey wished to maximize profit is he using the optimal amount of CCS or should he lease more or less of the CCS?