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Business, 11.02.2020 19:22 AllenTTG

The KMP Metal Machining Company produces widgets according to customer order. The company has determined that widgets can be produced on three different machine tools: M1, M2, or M3. An analysis of widget production cost reveals the following data:
Machine Tool Fixed Cost/Order Variable Cost/Unit
M1 $300 $9
M2 $750 $3
M3 $500 $5
A. For an order of size 75, which machine tool should be used to produce the order, and what is the total production cost?
B. For an order of size 160, assume that the preferred (most economical) machine is unavailable. What penalty (expressed in dollars of additional production cost) must be paid if the second most economical machine is used?

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