Your firm is considering adding a product line. The accounting department has determined that the cost function for this new product will be C(x) = 20x + 4840 and the revenue function will be R(x) = 60x, where x is the number of units sold. Additionally, the sales department has determined that you reasonably can expect to sell around 80 units. You must decide whether to go ahead with the new product line. Find the break-even quantity: Find the profit function: P(x)= = Make your decision: O Cancel the product line: the quantity needed to break even is more than our firm can reasonably expect to sell.

Your firm is considering adding a product line. The accounting department has determined that the cost function for this new product will be C(x) = 20x + 4840 and the revenue function will be R(x) = 60x, where x is the number of units sold. Additionally, the sales department has determined that you reasonably can expect to sell around 80 units. You must decide whether to go ahead with the new product line. Find the break-even quantity: Find the profit function: P(x)= = Make your decision: O Cancel the product line: the quantity needed to break even is more than our firm can reasonably expect to sell.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: The manufacturer of an energy drink spends $1.28 to make each drink and sells them for $3.27. The…

A: Given information: A manufacturer of energy drinks spends $1.28 to make each drink and sells them…

Q: Use the following information to create a standard cost card for production of one photography drone…

A: Cost is the sum of the resources—including time, money, materials, and labor—used to create a good…

Q: The cost function is TC(Q) = 20 + 15Q^2 for RussCo to produce its new Phone. Using that cost…

A: Approach to solving the question: Detailed explanation: (Long-term effects) In order to stay…

Q: You expect to sell 500 cell phones a month. The marginal cost of a cell phone is $50. If your…

A: The problem is asking for the break-even price of a cell phone. The break-even price is the price at…

Q: Based on the best available econometric estimates, the market elasticity of demand for your firm’s…

A: The market elasticity of demand for a product is -3 The marginal cost is $150 The average total cost…

Q: A sales representative for a company that produces electric can openers can sell x units of their…

A: We have total revenue = TR = px = 81.6x - 0.08x2

Q: Blissful Blankets' target profit is \$ \\$ 520,000 \$. Each blanket has a contribution margin of…

A: The concept can be described as the monetary gain that is attained when the revenue earned from…

Q: Tom, the only steel drum manufacturer in Narnia, can sell a single drum for $30. However, for every…

A: Here we calculate the output , price and Profit or loss by using the given information ,and fill the…

Q: A manufacturer can produce at most 90 units of a certain product each year. The demand equation for…

A: Firms engage in a process known as profit maximization to make sure that the best output volumes and…

Q: The Acmeville Metropolitan Bus Service currently charges $0.99 for an all-day ticket, and has an…

A: The current price of the all-day ticket is P1=0.99. At this price, the number of riders is…

Q: that a certain company sells each kg of the product it manufactures at $80, it is also known that…

A: The break point in economics aspects, business — and explicitly cost bookkeeping — is the place…

Q: Shopify, a well known Canadian firm is currently maximizing profit. If that is the case, Shopify…

A: Given: Canadian firm is maximizing profit.

Q: Bavarian Crystal Works designs and produces crystal wine decanters for export to international…

A: Given, Demand function: P=1,000−0.0025QP=1,000-0.0025Q Fixed cost = $1,000,000 Variable cost = $200…

Q: You are the CEO of Widget World Corporation. Researchers have developed a new electronic widget. The…

A: Expense Function is made up of Fixed Cost and Variable Cost Total Revenue = Price * Quantity Fixed…

Q: Diminishing Returns Jesaki Inc estimates that it will sell N(x) units of product after spending $x…

A: When the marginal product( MP) begins to rise or upto the point where marginal product curve has a…

Q: Firm K is a leading maker of water-proof outerwear. During the winter months, demand for its main…

A: A firm maximizes profit at that point where: Marginal Revenue = Marginal Cost Total Revenue =…

Q: ou've just been hired to run a division of a toy manufacturing company. Your boss informs you that…

A: Recall that, If demand is inelastic, increasing prices raises revenue. If demand is elastic,…

Q: A publisher for a promising new novel figures fixed costs (overhead, advances, promotion, copy…

A: Break even Point : Break even point can be defined as a point below which no producer will sell as…

Q: There is an oil change firm in town called Oil Pro. The total cost function for Oil Pro is below.…

A: When the firms breakeven they tend to earn Zero economic profit which implies total revenue is equal…

Q: What will be the accounting profit of the firm if the total revenue is $1020 and the explicit cost…

A: The information being given is :- Total revenue of the firm = $1020 Explicit cost = $350 We have to…

Q: find optimal price to sell for maximum profit given demand(unit sale) =…

A: In order to find the optimal price to sell for maximum profit, we need to first establish the profit…

Q: You should create a spreadsheet to answer this and the following six questions. Your U.S. based…

A: Profit is the excess income earned by the producer which is left after paying off all the expenses…

Q: As manager of the St. Cloud Theatre Company, you have decided that concession sales will support…

A: Let the amount sold for break even be 'x ' Total Cost = Fixed Cost + Variable Cost Variable Cost =…

Q: Redleaf company's market research department works on the manufacture and marketing of a winter tire…

A: A revenue function is a mathematical formula that shows the total amount of money a business earns…

Question

Your firm is considering adding a product line. The accounting department has determined that the cost
function for this new product will be C(x) = 20x +4840 and the revenue function will be R(x) = 60x,
where is the number of units sold. Additionally, the sales department has determined that you reasonably
can expect to sell around 80 units. You must decide whether to go ahead with the new product line.
Find the break-even quantity:
Find the profit function:
P(x) =
Make your decision:
O Cancel the product line: the quantity needed to break even is more than our firm can reasonably
expect to sell.
O Cancel the product line: producing these products is not profitable.
O Proceed with the product line: the products are profitable and we can reasonably expect to meet
our break-even quantity.

Expert Solution

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!

SEE SOLUTION Check out a sample Q&A here

Step 1: Determine the problem

VIEW

Step 2: Find the break even point

VIEW

Step 3: Find profit function

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

You have charged your client $8,650 on a cost plus percentage purchase of two sofas, two lounge chairs, and three occasional tables. If the occasional tables were 30% of the total client cost, and all cost the same amount, what was the net price of these tables at a 15% markup? Explain.
A firm produces two goods, A and B. Due to the product A’s fall in popularity near the end of last year, the estimated demand (units purchased) for A is 25% less than that of B. The selling price per unit is $30 for A and $20 for B. If the revenue target is $85,000 this year, how much of each of the two goods must be sold? (Round to whole number if necessary)
Assume a company expects to sell 6 million packages of Pop-Tarts Gone Nutty! in the first year after introduction but expects that 70 percent of those sales will come from buyers who would normally purchase existing Pop-Tart flavors (that is, cannibalized sales). The price for a package of Pop-Tarts Gone Nutty! is $1.30 and its variable cost is $0.65, when the price for a package of original Pop-Tart is $1.10 with variable cost of $0.30. Assuming the sales of regular Pop-Tarts are normally 300 million packages per year and that the company will incur an increase in fixed costs of $450,000 during the first year to launch Gone Nutty! will the new product be profitable for the company? Determine the unit contributions and the loss for every package cannibalized from the original product. (Round to the nearest cent.) Unit contribution original Pop-Tarts $ Pop-Tarts Gone Nutty! Loss for every package cannibalized S
The Acmeville Metropolitan Bus Service currently charges $0.99 for an all-day ticket and is used by an average of 623 riders a day. The bus company is not earning a profit, but according to their contract with the city, they cannot cut the number of buses on the road. They must, therefore, find a way to increase revenues The bus company is considering increasing the ticket price to $1.21. The marketing department's studies indicate this price increase would reduce usage to 473 riders per day. Calculate the price elasticity of demand using the midpoint method for bus tickets to determine if the bus company should increase price or decrease price to increase revenues. Enter your answer as an absolute value and round it to two places after the decimal price elasticity of demand: Determine if demand is elastic or inelastic and what this implies regarding how ticket prices affect revenue Demand is inelastic, so decreasing ticket prices will increase revenue Demand is inelastic, so…
The weekly demand for the LectroCopy photocopying machine is given by the equation p=2000-.04x where P debates the wholesale unit price
You manufacture ceramic lawn ornaments. After several months your accountant tells you that your profit P(n) can be modeled by the function P(n)= -0.002n^2+5.2n-1208 where n is number of ornaments sold each month. A) How many ornaments must you make and sell to break even. B) How many ornaments must you make and sell to maximize profit. C) What is the maximum profit. D) How many ornaments must you make and sell in order to earn a profit of $1657.
Thranduil company’s market research department is working on the pricing of a product. The field research shows that average demand is expected to be 8000 units at price 50 TL. From this point, each 1 TL change in price will negatively affect demand with a magnitude of 100 units. Fixed and variable costs are confronted for producing the product. According to the information obtained from the financial department, 200,000 TL is the estimate of fixed costs and 20 TL is the estimate of variable costs per unit produced. Assume that all units produced are sold.Which of the following prices is the one that maximizes the company's profit?
Given a cost function: C(x) = x² - 200x - 3500 And the following revenue function: R(x) = 6x2-400x What level of production will yield a profit of $6,000? 40 or 50 units of production 60 units of production 30 or 60 units of production 30 units of production None of these options 50 units of production
Assume demand is given as P = $2500-$25Q. The firm has a fixed cost of $3000 and variable costs of $2000 +$1.50 2A. Write out the firm's total revenue equation. B. Determine the Qvalue(s) where TR = 0. Determine the Q value where TR is maximum. C. Write out the firm's total cost function. D. Determine the firm's breakeven point(s) algebraically
AM Instrument Company manufactures miniature calculators, which it sells to a limited number of exclusive dealers. AM’s normal production rate is 260 units per week at a total cost of $3,200. At full capacity it can produce 340 units per week at a total cost of $3,800. What is the average cost per calculator under normal operating conditions? What is the average variable cost per calculator? What is the total fixed cost? What is the average fixed cost per calculator under normal operating conditions? A foreign distributor offers to buy 50 calculators per week from AM over a one month period, to be marketed under a different brand name. The distributor offers a price of $10 per calculator. Should AM accept the offer? What is the least price AM should accept for this kind of arrangement?
"A taxi company currently has nine cabs in its fleet, and its total daily cost is $4,000. If the company added a 10th cab, its daily total cost would be $4,200, or $420 per cab. Adding the 10th cab will increase the daily total revenue by $300. Should the company add the 10th cab? (Yes/No)"