A company has a linear total cost function and has determined that over the next three months it can produce 12,000 units at a total cost of $224, 000. This same manufacturer can produce 18,000 units at a total cost of $296, 000. The selling price per unit is $13.25. i. Determine the revenue, cost and profit functions using q for number of units. ii. What is the fixed cost ? iii. What is the marginal cost ? iv. Find the break-even quantity. v. What is the break-even dollar volume of sale ? vi. What will profit be if the company shuts down operation? vii. If, because of a strike, the company will be able to produce only 10,000 units, should it shut down for the next three months ? why or why not ?
A company has a linear total cost function and has determined that over the next three months it can produce
12,000 units at a total cost of $224, 000. This same manufacturer can produce 18,000 units at a total cost of
$296, 000. The selling price per unit is $13.25.
i. Determine the revenue, cost and profit functions using q for number of units.
ii. What is the fixed cost ?
iii. What is the marginal cost ?
iv. Find the break-even quantity.
v. What is the break-even dollar volume of sale ?
vi. What will profit be if the company shuts down operation?
vii. If, because of a strike, the company will be able to produce only 10,000 units, should it shut down for the next
three months ? why or why not ?
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