You inherited your father's concrete company which typically pours slab foundations for single family homes. You are trying to get a handle on the cost and revenue structure of the business. Your fixed cost per pour is $3,500, and variable costs include the price you pay for concrete aggregate mix plus $2.50 other variable costs per cubic yard. Although your cost structure includes fixed and variable costs, customers don't like such complicated math so you have decided to just charge $75 per cubic yard of concrete poured. One source of concrete aggregate material, which has 25% sand and 75% coarse aggregate, sells for $3 per cubic yard. Another source, which has 40% sand and 60% coarse aggregate, sells for $4.40 per cubic yard. A concrete aggregate mix must contain at least 31% sand by volume for proper batching. 1. Determine the least cost per cubic yard of blended aggregates. To do this, write an equation for the sand balance and solve. 2. Write a cost function that is a function of the volume of material to be poured, and do the same for a revenue function. 3. Plot both functions on an X-Y plot with the cost and revenue on the y-axis and the volume to be poured on the x axis. 4. Write a sentence or two interpreting the graph and indicating what size jobs are too small for your pricing structure.
You inherited your father's concrete company which typically pours slab foundations for single family homes. You are trying to get a handle on the cost and revenue structure of the business. Your fixed cost per pour is $3,500, and variable costs include the price you pay for concrete aggregate mix plus $2.50 other variable costs per cubic yard. Although your cost structure includes fixed and variable costs, customers don't like such complicated math so you have decided to just charge $75 per cubic yard of concrete poured. One source of concrete aggregate material, which has 25% sand and 75% coarse aggregate, sells for $3 per cubic yard. Another source, which has 40% sand and 60% coarse aggregate, sells for $4.40 per cubic yard. A concrete aggregate mix must contain at least 31% sand by volume for proper batching. 1. Determine the least cost per cubic yard of blended aggregates. To do this, write an equation for the sand balance and solve. 2. Write a cost function that is a function of the volume of material to be poured, and do the same for a revenue function. 3. Plot both functions on an X-Y plot with the cost and revenue on the y-axis and the volume to be poured on the x axis. 4. Write a sentence or two interpreting the graph and indicating what size jobs are too small for your pricing structure.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
You inherited your father's concrete company which typically pours slab foundations for single family homes. You are trying to get a handle on the cost and revenue structure of the business. Your fixed cost per pour is $3,500, and variable costs include the price you pay for concrete aggregate mix plus $2.50 other variable costs per cubic yard. Although your cost structure includes fixed and variable costs, customers don't like such complicated math so you have decided to just charge $75 per cubic yard of concrete poured.
One source of concrete aggregate material, which has 25% sand and 75% coarse aggregate, sells for $3 per cubic yard. Another source, which has 40% sand and 60% coarse aggregate, sells for $4.40 per cubic yard. A concrete aggregate mix must contain at least 31% sand by volume for proper batching.
1. Determine the least cost per cubic yard of blended aggregates. To do this, write an equation for the sand balance and solve.
2. Write a cost function that is a function of the volume of material to be poured, and do the same for a revenue function.
3. Plot both functions on an X-Y plot with the cost and revenue on the y-axis and the volume to be poured on the x axis.
4. Write a sentence or two interpreting the graph and indicating what size jobs are too small for your pricing structure.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 13 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education