Response to the following problem:
Total and unit cost decision making. Graham's Glassworks makes glass flanges fur scientific use. Materials cost $1 per flange, and the glass blowers are paid a wage rate of $20 per hour. A glass blower blows 10 flanges per hour. Fixed manufacturing costs for flanges are $20,000 per period. Period (non- manufacturing) costs associated with flanges are $10,000 per period, and are fixed.
1. Graph the fixed, variable and total manufacturing cost for flanges, using units (number of flanges) on the x-axis.
2. Assume Graham's Glassworks manufactures and sells 5,000 flanges this period. Their competitor, Fred's Flasks, sells flanges for $8.25 each. Can Graham sell below Fred's price and still make a profit on the flanges?
3. How would your answer to requirement 2 differ if Graham's Glassworks made and sold 10,000 flanges this period? Why? Whet does this indicate about the use of unit cost in decision making?