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Chapter 10 example 1
Dear sir,
I could not understand how did you calculate pay off table of answer a . please mention its calculation……..Best Regards
Ram Krishna ChaulagainWhatever the amount we have signed the contract for, we have to supply these and we make $9-$6 = $3 per unit on each of those.
The amount we supply to other customers are at the normal selling price ($11) and so on these we make $5 per unit.
However remember that we can obviously only see the number demanded, but also that the maximum we can produce is 1200 units. We have to supply the contract and so, for example, if we have signed the contract for 800 units then the most that we can supply to normal customers is 400 units (however many they actually demand).
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