Unit 3 Ip Econ 220 Essay - 702 Words

Chad Carter American Intercontinental University Unit 3 Individual Project ECON 220 – Microeconomics May 19, 2013 Abstract This paper will provide an analysis of 2 production scenarios. We will calculate costs associated with running a production facility. Furthermore, the analysis will be used to provide a basic understanding of how changes in staffing and productivity impact profit and loss. Management’s Production Decision Introduction This report will provide insight on what your management team should do concerning production costs. We will examine 2 different scenarios and provide our decision as to which makes most sense. In the first scenario, the total fixed cost of the production is 1,000,000. In the second†¦show more content†¦= loss of $2,400,000 Conclusion For both scenarios, the firm’s output price and average variable cost are the same. The difference lies in the average total cost. Because the total fixed cost is significantly higher, the average total cost is also significantly higher. It would be highly recommended that the firm shut down if total fixed costs are equal to 3,000,000. In the first scenario, the firm is also losing money. We would recommend laying off ten percent of the staff (5000 employees) to account for the $400,000 loss. However, it is important to note, employee productivity must be increased to 4.44 in order to maintain the 200,000 units per day. This w ould allow the firm to operate in a break even state. Keep in mind, if you are unable to increase productivity, you would actually increase your average variable cost. This increased variable cost will cause you to increase your overall loss from 400,000 to 500,000. Here are the numbers: Total Variable Cost = (Number of Workers * Worker’s Daily Wage) + Other Variable Costs 45,000(workers) * $80(daily wage) = 3,600,000 + 400,000(other variable cost) Total Variable Cost = 4,000,000 Average Variable Cost = Total Variable Cost / Units of Output per Day 4,000,000(total variableShow MoreRelatedBank of Queensland Research Paper Banking Industry21330 Words   |  86 Pages........ .................. .................. ....................................................  3   1.  0  Profiling  the e  Corporate e  Structure     discussin ng  the  Agency  problem m  ..................................................  3   Overview  .................... O .................. .................. .................. .................. ....................................................  3   Core operat C ting activiti .............. ies   .................. .................. ............Read MoreNokias Human Resources System144007 Words   |  577 PagesSection 15(d) of the Exchange Act: 5.375% Notes due 2019 and 6.625% Notes due 2039 Indicate the number of outstanding shares of each of the registrant’s classes of capital or common stock as of the close of the period covered by the annual report. Shares: 3 744 956 052. Indicate by check mark if the registrant is a well ­known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ≠¤ No n If this report is an annual or transition report, indicate by check mark if the registrant is not required