Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
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Chapter 2, Problem 25P
To determine
Calculate the annual profit
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A company makes and sells toasters. To make the toasters there is
a fixed monthly cost of $27,000 and an additional production cost of $30 per
toaster. The toasters sell for $75 each.
(a) Write down the cost function.
(b) Write down the revenue function.
(c) Find the profit function.
(d) Find the break even point.
(e) How many toasters must the company sell to make a 15% profit?
Bags/Participants
Fixed Cost
Variable Cost
Total Cost
0
$1,700
$ -
$1,700
100
$1,700
$500
$2,200
200
$1,700
$1,200
$2,900
300
$1,700
$2,700
$4,400
400
$1,700
$5,200
$6,900
500
$1,700
$9,000
$10,700
600
$1,700
$15,000
$16,700
700
$1,700
$23,800
$25,500
800
$1,700
$36,800
$38,500
900
$1,700
$55,800
$57,500
1,000
$1,700
$83,000
$84,700
Given the above information on cost, if you charge $15 per entry, what is the breakeven quantity of bags that you should order? At what quantity of bags will profits be maximized?
A
Use the profit maximizing rule, MR ≥ MC, buy 300 bags.
B
Use the profit maximizing rule, MR ≥ MC, buy 200 bags.
C
Use Qb = F/(MR-AVC) where Qb is the breakeven quantity to be determined, the optimal quantity of bags is 300.
D
Use Qb = F/(MR-AVC) where Qb is the breakeven quantity to be determined, the optimal quantity of bags is 200.
If JMJ Industries realizes a profit of $4.00 per unit sold, what is the fixedcost portion of their production costs? Their variable costs are $1.50 per unit, and they sell 1000 units per year at a price of $6.00 per unit. (a) There are no fixed costs in this type of problem. (b) $250 (c) $500 (d) $2000
Chapter 2 Solutions
Engineering Economy
Ch. 2 - An experimental composite engine block for an...Ch. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Prob. 7PCh. 2 - Prob. 8PCh. 2 - Prob. 9PCh. 2 - Prob. 10P
Ch. 2 - Prob. 11PCh. 2 - Prob. 12PCh. 2 - Prob. 13PCh. 2 - Prob. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - Prob. 17PCh. 2 - Prob. 18PCh. 2 - Prob. 19PCh. 2 - Prob. 20PCh. 2 - Prob. 21PCh. 2 - Prob. 22PCh. 2 - Prob. 23PCh. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - Prob. 26PCh. 2 - Prob. 27PCh. 2 - Prob. 28PCh. 2 - Prob. 29PCh. 2 - Prob. 30PCh. 2 - Prob. 31PCh. 2 - An automobile dealership offers to fill the four...Ch. 2 - Prob. 33PCh. 2 - Prob. 34PCh. 2 - Prob. 35PCh. 2 - Prob. 36PCh. 2 - Prob. 37PCh. 2 - Prob. 38PCh. 2 - Prob. 39PCh. 2 - Prob. 40PCh. 2 - Prob. 41PCh. 2 - Prob. 42PCh. 2 - Prob. 43PCh. 2 - Prob. 44PCh. 2 - A hot water leak in one of the faucets of your...Ch. 2 - Prob. 46PCh. 2 - Prob. 47PCh. 2 - Prob. 48SECh. 2 - Prob. 49SECh. 2 - Prob. 50CSCh. 2 - Prob. 51CSCh. 2 - What is the optimal number of units that should be...Ch. 2 - Prob. 53FECh. 2 - Prob. 54FECh. 2 - Prob. 55FECh. 2 - Prob. 56FECh. 2 - Prob. 57FECh. 2 - Prob. 58FE
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