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A new machine comes with 180 free service hours over the first year. Additional time costs $150.5 per hour. What is the marginal cost per hour for 250 hours?

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Related questions

You have just been hired by SecuriDoor Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and do what you can to help us get better control of our manufacturing overhead costs. You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for April:

Cost formula:

Actual cost in April, utilities $16,500 plus $.18 per machine-hour $21,360, maintenance $38,400 plus $1.40 per machine-hour $56,000, supplies $.80 per machine-hour  $13,400, indirect labor $94,900 plus $2.00 per machine-hour $129,800, depreciation $67,700 $69,400. During April, the company worked 15,000 machine-hours and produced 9,000 units. The company had originally planned to work 17,000 machine-hours during April.

Required:

1. Complete a report showing the activity variances for April. Complete a report showing the spending variances for April.

For annual output Q, where Q=500L0.6K0.8 where L is labor measured in hours and K is capital measured in machine hours.

The marginal products areMPL=300L-0.4K0.8 andMPK=400L0.6K-0.2.

Wage=$15 per hour and capital = $50 per hour.

a) How much capital and labor should the firm employ given the $500,000 budget? Calculate the output.

b) If wage rises to $22.50, find the new optimal capital-labor ratio. Should the company increase or decrease the labor input under the new situation?

Edward the entrepreneur takes 2 hours to cut a lawn, and he cuts1,000 lawns per year. He uses solar-powered equipment (truck and over) that will last forever -- and could be sold at any time for$20,000. Edward could earn $12 per hour as a pedicurist. The interest rate is 10%.

Given his current output level, compute his marginal cost and the average cost of cutting lawns. Suppose he decides to reduce the number of lawns cut by half, to 500 per year. Compute the new marginal cost and average cost.

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