Use the information below to answer the following questions.
Computers Expertise Ltd provides three services, the details for which are as follows: $\begin{array}{llll}
& \underline{\text { Basic} }& \underline{ \text { Secretarial }} & \underline{ \text { Expert }}\
\text { Sales price per unit } & \$ 20 & \$ 30 & \$ 50 \
\text { Variable cost per unit } & \$ 10 & \$ 12 & \$ 15 \
\text { (paper, transport, etc.) } & & & \
\text { Labour time per unit } & 1 \text { hour } & 2 \text { hours } & 5 \text { hours } \
\text { Annual fixed costs } & \$ 20,000 & &
\end{array}$
The demand for all service is unlimited. The ability to provide the service is limited by the availability of qualified staff and therefore the labour time available.
-Refer to the table above. The demand for Secretarial Service is very strong, however, Computer Expertise does not have sufficient labour hours available to meet the demand. An employment agency is able to supply qualified staff to provide the Secretarial Service. What is the maximum price Computer Expertise should be prepared to pay per hour?

Question

Use the information below to answer the following questions.
Computers Expertise Ltd provides three services, the details for which are as follows: $\begin{array}{llll}
& \underline{\text { Basic} }& \underline{ \text { Secretarial }} & \underline{ \text { Expert }}\ 
\text { Sales price per unit } & \$ 20 & \$ 30 & \$ 50 \
\text { Variable cost per unit } & \$ 10 & \$ 12 & \$ 15 \
\text { (paper, transport, etc.) } & & & \
\text { Labour time per unit } & 1 \text { hour } & 2 \text { hours } & 5 \text { hours } \
\text { Annual fixed costs } & \$ 20,000 & &
\end{array}$
 The demand for all service is unlimited. The ability to provide the service is limited by the availability of qualified staff and therefore the labour time available.
-Refer to the table above. The demand for Secretarial Service is very strong, however, Computer Expertise does not have sufficient labour hours available to meet the demand. An employment agency is able to supply qualified staff to provide the Secretarial Service. What is the maximum price Computer Expertise should be prepared to pay per hour?

Quizplus · Accepted Answer

The maximum price Computer Expertise should be prepared to pay per hour is $9. This is because the variable cost per unit for the Secretarial Service is $12, and the contribution per hour is $18 ($30 sales price per unit - $12 variable cost per unit). Therefore, the maximum price Computer Expertise should be prepared to pay per hour is $9 ($18 contribution per hour / 2 hours labour time per unit).

Use the Information Below to Answer the Following Questions The Demand for All Service Is Unlimited