Question

The Moore Division of Block C Enterprises manufactures and sells specialty semiconductors. Moore sells 1300 of one of these specialized semiconductors each month at a price of $1200 each. Variable costs amount to $1,000,000, and fixed costs are $400,000. Currently Moore has a defect rate of 5 percent (which are chips returned by customers, scrapped, and replaced). Note that the variable costs include the cost of producing the defective chips. If the defect rate can be reduced to zero, calculate the new profit associated with producing this semiconductor.

Please show the steps in solving.

Options:

	$242800
	$324400
	$407200
	$492400
	$578800
	$667600
	$757600
	$918400

Answer 1

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