The XYZ company has two plants producing "K Specials". It has the following expected datafor the next month's operations. Variable (incremental) costs vary linearly from zeroproduction to maximum capacity production.plant Aplant BMax. Capacity, units1,000800Total fixed cost750,000480,000Variable (incremental) CostsMax. Capacity900,000800,000Performance has not been good, so the company expects to receive domestic ordersfor only 1,200 units next month at a price of 1,400 per unit. How should the production bedistributed between the plants for optimum economic operation?A. Plant A should produce 800 units and 400 units for Plant B.B. Plant A should produce 1,000 units and 200 units for Plant B.C. Plant A should produce 700 units and 500 units for Plant B.D. Plant A should produce 900 units and 300 units for Plant B.

The detailed solution is given in Step 2.

Answered: The XYZ company has two plants…

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

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