Question: San Diego Sheet Metal, Inc. incurs a variable cost of $40 per pound for raw material to produce a special alloy used in manufacturing aircraft.

San Diego Sheet Metal, Inc. incurs a variable cost of $40 per pound for raw material to produce a special alloy used in manufacturing aircraft.

Required:

1. Draw a graph of the firm’s raw material cost, showing the total cost at the following production levels: 10,000 pounds, 20,000 pounds, and 30,000 pounds.

2. Prepare a table that shows the unit cost and total cost of raw material at the following production levels: 1 pound, 10 pounds, and 1.000 pounds.

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