A medium sized scale company manufactures a certain product with an estimated variable costs,per unit, v 36Q - 14400 and an aggregated fixed costs of $81000. The price-quantity demandrelationship for this product is P=-0.27Q+270, where P is the unit sales price of the productand Q is the annual quantity demand.• Total cost = Fixed cost + Variable cost• Revenue Quantity Demand x Price•Profit = Revenue - Total costa) Develop the equations for total cost and total revenue.b) Find the breakeven quantity.c) What profit is earned if i) total cost is minimized and ii) total revenue is maximized?d) Which of the strategy will be better for the company to adopt to optimize their profit, isit to minimize total cost or maximize total revenue. Give reason for your choicee) What is the company's maximum possible profit?

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A medium sized scale company manufactures a certain product with an estimated variable costs, per unit, v 36Q- 14400 and an aggregated fixed costs of $81000. The price-quantity demand relationship for this product is P=-0.27Q+270, where P is the unit sales price of the product and Q is the annual quantity demand. • Total cost=Fixed cost+ Variable cost • Revenue Quantity Demand x Price •Profit = Revenue - Total cost %3D a) Develop the equations for total cost and total revenue. b) Find the breakeven quantity. c) What profit is earned ifi) total cost is minimized and ii) total revenue is maximized?

A medium sized scale company manufactures a certain product with an estimated variable costs, per unit, v 36Q- 14400 and an aggregated fixed costs of $81000. The price-quantity demand relationship for this product is P=-0.27Q+270, where P is the unit sales price of the product and Q is the annual quantity demand. • Total cost=Fixed cost+ Variable cost • Revenue Quantity Demand x Price •Profit = Revenue - Total cost %3D a) Develop the equations for total cost and total revenue. b) Find the breakeven quantity. c) What profit is earned ifi) total cost is minimized and ii) total revenue is maximized?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A medium sized scale company manufactures a certain product with an estimated variable costs,
per unit, v 36Q - 14400 and an aggregated fixed costs of $81000. The price-quantity demand
relationship for this product is P=-0.27Q+270, where P is the unit sales price of the product
and Q is the annual quantity demand.
• Total cost = Fixed cost + Variable cost
• Revenue Quantity Demand x Price
•Profit = Revenue - Total cost
a) Develop the equations for total cost and total revenue.
b) Find the breakeven quantity.
c) What profit is earned if i) total cost is minimized and ii) total revenue is maximized?
d) Which of the strategy will be better for the company to adopt to optimize their profit, is
it to minimize total cost or maximize total revenue. Give reason for your choice
e) What is the company's maximum possible profit?

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