Management believes it can sell a new product for $8.50. The fixed costs of production are                estimated to be $6,000, and the variable costs are $3.20 a unit. Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs. Quantity Total Revenue Variable Costs Fixed Costs Total Costs Profits (Loss) 0           500           1,000           1,500           2,000           2,500           3,000               Determine the break-even level using the above table and use the following Equation to confirm the break-even level of output. PQB = FC + VQB PQB - VQB = FC QB (P-V) = FC QB = FC         P-V What would happen to the total revenue schedule, the total cost schedule, and the break-even level of output if management determined that fixed costs would be $10,000 instead of $6,000?

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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 Management believes it can sell a new product for $8.50. The fixed costs of production are                estimated to be $6,000, and the variable costs are $3.20 a unit.

  1. Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs.

Quantity

Total Revenue

Variable Costs

Fixed Costs

Total Costs

Profits (Loss)

0

 

 

 

 

 

500

 

 

 

 

 

1,000

 

 

 

 

 

1,500

 

 

 

 

 

2,000

 

 

 

 

 

2,500

 

 

 

 

 

3,000

 

 

 

 

 

 

 

  1. Determine the break-even level using the above table and use the following Equation to confirm the break-even level of output.

PQB = FC + VQB

PQB - VQB = FC

QB (P-V) = FC

QB = FC

        P-V

  1. What would happen to the total revenue schedule, the total cost schedule, and the break-even level of output if management determined that fixed costs would be $10,000 instead of $6,000?

 

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