A company produces an electronic timing switch that is used in consumer and commercial products. The fixed cost (CF ) is $73,000 per month, and the variable cost (cv) is $83 per unit. The selling price per unit is p = $180 − 0.02(D). For this situation, (a) determine the optimal volume for this product and confirm that a profit occurs (instead of a loss) at this demand. (b) find the volumes at which breakeven occurs; that is, what is the range of profitable demand? Solve by hand and by spreadsheet.
A company produces an electronic timing switch that is used in consumer and commercial products. The fixed cost (CF ) is $73,000 per month, and the variable cost (cv) is $83 per unit. The selling price per unit is p = $180 − 0.02(D). For this situation, (a) determine the optimal volume for this product and confirm that a profit occurs (instead of a loss) at this demand. (b) find the volumes at which breakeven occurs; that is, what is the range of profitable demand? Solve by hand and by spreadsheet.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter8: Cost Analysis
Section: Chapter Questions
Problem 5E
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A company produces an electronic timing switch that is used in consumer and commercial products. The fixed cost (CF ) is $73,000 per month, and the variable cost (cv) is $83 per unit. The selling price per unit is p = $180 − 0.02(D). For this situation, (a) determine the optimal volume for this product and confirm that a profit occurs (instead of a loss) at this demand. (b) find the volumes at which breakeven occurs; that is, what is the range of profitable demand? Solve by hand and by spreadsheet.
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