Taizhong Semiconductor Company mass produces several common computer chips. Type A sells for $1.20 per unit. Variable cost was $0.95 per unit and the fixed costs were $32 000 per month. Taizhong currently sells 140 000 units per month. Because of volatility in the precious metals market, the variable cost per unit has just gone up by $0.05, but the company does not believe it can pass the extra cost on to the customer. To offset higher variable costs, the production manager has developed a plan which will reduce fixed costs by 20%. How will these combined changes affect net profit?

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The Answer of Taizhong Semiconductor Company mass produces several common computer chips. Type A sells for $1.20 per unit. Variable cost was $0.95 per unit and the fixed costs were $32 000 per month. Taizhong currently sells 140 000 units per month. Because of volatility in the precious metals market, the variable cost per unit has just gone up by $0.05, but the company does not believe it can pass the extra cost on to the customer. To offset higher variable costs, the production manager has developed a plan which will reduce fixed costs by 20%. How will these combined changes affect net profit?

Taizhong Semiconductor Company Mass Produces Several Common Computer Chips