Question: 7. (Maximum Grade: 2.5 points - Suggested Time: 2.5 minutes) Drama Company is using all its practical capacity to produce its only product, which has
7. (Maximum Grade: 2.5 points - Suggested Time: 2.5 minutes) Drama Company is using all its practical capacity to produce its only product, which has a selling price of $26 per unit, materials cost of $10 per unit, and labour cost of $12 per unit. Labour is the constraining factor of production and 0.5 labour hours are required to make each unit of this product. An important customer has asked Dollar Company to make two units of a new product. Each unit of the new product will be produced by taking the existing product and adding materials cost of $5 and an additional 0.25 labour hours. What is the floor price for two units of this new product? a. $66. b. $74. c. $78. d. None of the above
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