Priest and Sons, a local manufacturer of a product that sells for $13.50 per unit. Variable cost per unit is $7.85 and fixed cost per period is $1 220. Capacity per period is 1100 units. Perform a break-even analysis showing a) an algebraic statement of (i) the revenue function; (ii) the cost function; (iii) calculate the break-even point in units. b) a detailed break-even chart.

Priest and Sons, a local manufacturer of a product that sells for $13.50 per unit. Variable cost per unit is $7.85 and fixed cost per period is $1 220. Capacity per period is 1100 units. Perform a break-even analysis showing a) an algebraic statement of (i) the revenue function; (ii) the cost function; (iii) calculate the break-even point in units. b) a detailed break-even chart.

Managerial Economics: A Problem Solving Approach

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ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter3: Benefits, Costs, And Decisions

Section: Chapter Questions

Problem 8MC

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Step 1: Break-even Analysis - Concept:

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Step 2: (i) Algebric Statement of Revenue Function

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Step 3: (ii) Algebric statement of Cost Function:

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Step 4: (iii) Calculation of Break-even Point in Units:

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Step 5: Break-even Chart - Concept:

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Step 6: Break Even Chart -Graph:

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