Vintage cellars manufactures a 1000-bottle wine cargo space

Reference no: EM13370883

Vintage Cellars manufactures a 1,000-bottle wine cargo space system that maintains optimum temperature (55-57 °F) and humidity (50-80 percent) for aging wines. The system has a backup battery for power failures and will store red and white wines at different temperatures. The subsequent table depicts how average cost varies with the number of units manufactured and sold (per month):
Quantity Average Cost
1 $12,000
2 10,000
3 8,600
4 7,700
5 7,100
6 7,100
7 7,350
8 7,850
9 8,600
10 9,600

Required:

a. Create a table that computes the total cost and marginal cost for every quantity between 1 and 10 units.

b. What is the relation between marginal cost and average cost?

c. Find what is the opportunity cost of producing one more unit if the company is presently producing and selling four units?

d. Vintage Cellars sells the units for $9,000 each. This price does not vary with number of units sold. Find how many units should Vintage manufacture and sell each month?

Reference no: EM13370883

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