Question

Using the table below:

Recommend production levels and forecast profits for two computer chip price scenarios:

The price of 32 MB RAM chips reaches $62 per chip &

The price of 32 MB RAM chips falls to $35 per chip

Determine the price below which the company should shut down operations in the short run.

How many chips should be produced (monthly) if chip prices are $62 per chip?

How many chips should be produced (monthly) if chip prices are $35 per chip? Forecast the profit at this output level.

At what price should the company shut down and produce no chips in the short run?

Month	Monthly Production of finished Product	Business License & Fees	Insurance Premiums	Building Lease Payment	Materials Expense	Telephone	Energy Expense	Wage Expense
Nov-98	875	0	0	3570	9690	945	7230	12250
Dec-98	670	0	0	3570	6700	945	5115	8995
Jan-99	1675	6000	2200	3570	16295	945	12884	23106
Feb-99	1155	0	0	3570	11285	945	9240	15225
Mar-99	1845	0	0	3570	16550	945	14220	24530
Apr-99	1650	0	0	3570	16230	945	12700	21600
May-99	1955	0	0	3570	19626	945	15640	27484
Jun-99	2845	0	0	3570	27410	945	22760	39830
Jul-99	2265	0	2200	3570	20526	945	1724	31225
Aug-99	3470	0	0	3570	34176	830	25760	48564
Sep-99	3665	0	0	3570	36726	830	28720	50094
Oct-99	3750	0	0	3570	42576	830	32000	54474
Nov-99	4595	0	0	3570	48226	830	37260	66414
Dec-99	4060	0	0	3570	41095	830	33155	57840
Jan-00	3575	7200	2450	4200	34550	830	27400	50050
Feb-00	4380	0	0	4200	41800	830	34460	61320
Mar-00	5575	0	0	4200	81750	830	54600	82150
Apr-00	7870	0	0	4200	92360	830	102960	130180
May-00	6750	0	0	4200	89576	830	70000	109774