A factory produces beach umbrellas they have a fixed cost they must pay no matter
how many umbrellas they produce. This includes expenses such as rent, utilities, and salaries for employees. In addition to the fixed costs, there are also variable costs associated with producing each umbrella, such as materials and labor.
The factory must carefully manage their costs in order to be profitable. They must consider factors such as the market demand for umbrellas, the cost of materials and labor, and the pricing strategy for their products. By closely monitoring their expenses and adjusting production levels as needed, the factory can ensure they are able to cover their fixed costs and generate a profit.
In order to maximize their profitability, the factory may also need to consider ways to reduce costs, such as improving efficiency in their production processes or sourcing materials from cheaper suppliers. By carefully managing their fixed and variable costs, the factory can ensure they remain competitive in the market and continue to produce high-quality beach umbrellas for their customers.