The table shows the average production data for three products over the last month. The difference between the costs and the sale price is the company profit for one unit.
If a new production method allows the labor costs of Product C to be reduced to $3.45 per unit while increasing the maximum production to 250 units per month, what percentage increase in profit would the company see from that product?
No table. Cannot copy and paste here.
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252%
because c'=1323 c=525
c'/c=252%
To calculate the percentage increase in profit for Product C, we need to compare the profit before and after implementing the new production method.
First, let's determine the profit before the change in production method. The profit for one unit of Product C can be calculated by subtracting the cost from the sale price:
Profit before = Sale price - Cost
Profit before = $10.50 - $6.20
Profit before = $4.30
Next, let's calculate the profit after the change in production method. The labor costs have decreased to $3.45 per unit, and the maximum production has increased to 250 units per month. Therefore, the new cost per unit will be $3.45 and the new maximum production will be 250 units.
Profit after = Sale price - Cost
Profit after = $10.50 - $3.45
Profit after = $7.05
To calculate the percentage increase in profit, we can use the formula:
Percentage increase = ((New profit - Old profit) / Old profit) * 100
Percentage increase = ((7.05 - 4.30) / 4.30) * 100
Percentage increase = (2.75 / 4.30) * 100
Percentage increase ≈ 64.0%
Therefore, the company would see around a 64.0% increase in profit for Product C after implementing the new production method.