please help with math problem

[viktorcwok]

A tool factory in germany produces 150 tools per hour. The workers produce tools 8 hours a day, 21 days a month at a cost of 250,000 $ per work month. Overtime production costs 1,750 $ per hour. If the tools are priced at 15 $ each, the factory can manage to sell all the tools produced during the 8 hour day. The factory marketer insisted that they can sell an additional 3,000 tools per month if they lower the price of each tool to 14 $. A clever worker noted that this would actually decrease profits.

How much $ would this actually reduce profit by?

 

[JeffM]

A tool factory in germany produces 150 tools per hour. The workers produce tools 8 hours a day, 21 days a month at a cost of 250,000 $ per work month. Overtime production costs 1,750 $ per hour. If the tools are priced at 15 $ each, the factory can manage to sell all the tools produced during the 8 hour day. The factory marketer insisted that they can sell an additional 3,000 tools per month if they lower the price of each tool to 14 $. A clever worker noted that this would actually decrease profits.

How much $ would this actually reduce profit by?

There is no way for us to help you with your work if you do not show us what you have done. I suggest that you read Read Before Posting.

 

[viktorcwok]

all i got is 25,200 tools per month, 21 per tool. I don't understand where the 14,15 and over time comes from.

 

[JeffM]

A tool factory in germany produces 150 tools per hour. The workers produce tools 8 hours a day, 21 days a month at a cost of 250,000 $ per work month. Overtime production costs 1,750 $ per hour. If the tools are priced at 15 $ each, the factory can manage to sell all the tools produced during the 8 hour day. The factory marketer insisted that they can sell an additional 3,000 tools per month if they lower the price of each tool to 14 $. A clever worker noted that this would actually decrease profits.

How much $ would this actually reduce profit by?

all i got is 25,200 tools per month, 21 per tool. I don't understand where the 15,16 and over time comes from.

We know nothing about you, what course you are taking, how much math you know. Read Read before Posting.

Ok I see where you got 25200

\(\displaystyle \dfrac{150\ tools}{hour} * \dfrac{8\ hours}{day} * \dfrac{21\ days}{month} = \dfrac{25200\ tools}{month}.\)

Do you know the formula for computing profits given variable and fixed costs? If so what is it?

Whether you know that formula or not, you should be able to figure out monthly sales (monthly revenue) are in terms of dollars. What's that number?

 

[viktorcwok]

il be honest with you, i don't do any course but this is a special credit equation for a video game, if i answer it i get points but i have no idea what level maths this is. I am terrible at math, failed it in school. I know you won't answer this for me but could you give me the formula or a tip? i'l try figuring it out.

 

[JeffM]

il be honest with you, i don't do any course but this is a special credit equation for a video game, if i answer it i get points but i have no idea what level maths this is. I am terrible at math, failed it in school. I know you won't answer this for me but could you give me the formula or a tip? i'l try figuring it out.

That is exactly what we do do. Help you figure it out.

The basic formula for profit is

revenue - costs = profit. Simple as pie.

But what is revenue? Being simple about it, it's the number of things you sell times the sales price of the thing.

So you already figured out how many tools this company sells each month. And the problem tells you at what price they currently are selling them for. So you multiply those two numbers together to figure out what the company's revenues are each month. What do you get?

 

[viktorcwok]

That is exactly what we do do. Help you figure it out.

The basic formula for profit is

revenue - costs = profit. Simple as pie.

But what is revenue? Being simple about it, it's the number of things you sell times the sales price of the thing.

So you already figured out how many tools this company sells each month. And the problem tells you at what price they currently are selling them for. So you multiply those two numbers together to figure out what the company's revenues are each month. What do you get?

25200 x 15 = 378000

 

[JeffM]

25200 x 15 = 378000

Exactly

Write down on a piece of paper four column headings

Variable Current Proposed Difference

Skip a line

Write Revenue under variable. Write 378,000 under current. The Marketing guy wants to raise sales by 3000 a month by cutting price to what. So under that proposal what would revenue be? Write that down beside 378,000 under proposed. Now subtract 378,000 from that proposed revenue and write it down under difference. What is it? Does the proposed pricing change increase or decrease revenue?

Next line down write Cost under variable.

The cost part of the equation is normally quite a bit more complicated. In this problem, however, they seem have made things artificially easy. They say costs are 250,000 each month. Write that down under current. Here comes the hard part. They tell you what costs will be for making more tools due to overtime etc. But they give you that cost in hours. What is that cost in units made? And how many extra units are you making? So what is the extra cost for making all those extra units? So what do you write down under Proposed for costs. Now subtract the 250,000 from that. What do you get? Write that down under Difference. Did the increase in production increase or decrease costs?

 

[JeffM]

Well, because this is not homework, but a plea for help(!), plus really simple,
here's a simple way to do it:

Normal month
=========
Hours worked in 1 month: 21 (days) * 8 (per day) = 168

Tools produced in 1 month: 168 (hours) * 150 (tools per hour) = 25,200 [1]

Gross revenue: 25200 (tools produced) * $15 (per tool) = $378,000

Net revenue = $378,000 - $250,000 (labour) = $128,000

Add'l 3000 tools
============
Hours required: 3000 / 150 (per hour) = 20

Labour cost = 20 (hours) * $1,750 (overtime rate) = $35,000

Gross revenue: 3000 (tools) * $14 (per tool) = $42,000

Net revenue: $42,000 - $35,000 (labour) = $7,000 [2]

Wrap-up
======
[1] Reduction to revenue: 25200 tools sold at $1 lesser = -$25,200
[2] Increase to revenue: $7,000
Net effect: -25,200 + 7,000 = -$18,200

So Jeff, the clever worker (taking night course in maths) was correct!

I did not say the worker was wrong. Indeed I got your answer. I was just hoping to make the OP into a CFO. All he would need to do when I was done with him was to buy a white shirt and a power tie.

\(\displaystyle Variable\ \ \ Current\ \ \ Proposed\ \ \ Difference\)

\(\displaystyle Revenue\ \ \ \ 378,000\ \ \ \ \ 394,800\ \ \ \ \ \ \ \ \ 16,800\)

\(\displaystyle Cost\ \ \ \ \ \ \ \ \ \ \ 250,000\ \ \ \ \ 285,000\ \ \ \ \ \ \ \ \ 35,000\)

\(\displaystyle Profit\ \ \ \ \ \ \ 128,000\ \ \ \ \ 109,800\ \ \ \ -18,200\)

Even a board of directors can grasp that.

 

[JeffM]

But denis, I am too lazy to work and certainly way too lazy to go to night school. (To learn a little math, I did that for a while back in the 60's between college and grad school; it was brutal.)

 

[HallsofIvy]

Well, because this is not homework, but a plea for help(!), plus really simple,
here's a simple way to do it:

I have never heard of a video game that had "extra credit" math problems!