7. Exercise 8.7 Kitchen Helper Company decides to produce and sell food blenders and is considering three different types of production facilities (“plants”). Plant A is a labor-intensive facility, employing relatively little specialized capital equipment. Plant B is a semi-automated facility that would employ less labor than A but would also have higher capital equipment costs. Plant C is a completely automated facility using much more high-cost, high-technology capital equipment and even less labor than B. Information about the operating costs and production capacities of these three different types of plants is shown in the following table. Unit variable costs $9.00 $8.50 $4.50 $925 $325 Overhead $1.00 $150 $2.00 Total $9.00 $.00 $7.00 And cost Depreciation $6000 $100.000 $200,000 $30,000 $60.000 $0.00 $100.000 $100,000 $150,000 Overhead $150.000 7.000 $250.000 150.000 $450,000 350.000 Ana Determine the average total cost schedules for each plant type to fill first three empty columns of the following table. (Hint: For output levels beyond the capacity of a given plant, assume that multiple plants of the same type are built. For example, to produce 200,000 units with Plant A, three of these plants would be built.) Note: If necessary, round to two decimal places. Short-Run Average Total Cost (SRATC) (Dollars) (Dollars) (Dollars) В Long-Run Average Total Cost (LRATC) (Dollars) Output (0) 50,000 100,000 150,000 200,000 250,000 300,000 350,000 Based on the cost schedules calculated, construct the long-run average total cost schedule for the production of blenders and fill the final column of the preceding table.
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