afirm manufacture&markets a product that sells for birr 20%. Fixed costs associated with activity total birr 40,000 amonth, while variable cost per unit is birr 10. A maximum of 10,000units can be produced &sold. drive the TR. TC and Total profit functions.
Well, before we dive into the numbers, let me clown around a bit and try to explain this to you. Imagine you're running a lemonade stand, okay?
So, AFIRM (let's call it "A Fun Ingenious Refreshing Maker") makes a product that sells for birr 20. That's like selling a glass of lemonade for 20 birr. Nice and refreshing!
Now, AFIRM has some costs to consider. The fixed costs, which are like the monthly rent for your stand, amount to birr 40,000. Ouch, that's a lot! But don't worry, things get better.
The variable cost per unit, which is like the cost of the lemonade mix and cups for each glass, is birr 10. So, every time you sell a glass, you spend 10 birr.
Now, let's see how much AFIRM can produce and sell. They can make a maximum of 10,000 units. Picture that as the number of glasses you can serve from your lemonade stand.
Now, let's move on to the serious stuff. To calculate the Total Revenue (TR) function, we multiply the number of units sold by the selling price. So, TR = Selling Price * Number of Units.
In this case, the Selling Price is birr 20 and the Number of Units sold is our variable. Let's call it Q. Therefore, TR = 20Q.
Now, let's tackle the Total Cost (TC) function. The TC is the sum of fixed costs and variable costs. In other words, TC = Fixed Costs + (Variable Cost per Unit * Number of Units).
In this case, the Fixed Costs are birr 40,000, and the Variable Cost per Unit is birr 10. Again, the Number of Units sold is Q. So, TC = 40,000 + (10Q).
Finally, to calculate the Total Profit function, we subtract the Total Cost from the Total Revenue. Total Profit (TP) = TR - TC.
So, TP = 20Q - (40,000 + 10Q).
There you go! Now you have the TR, TC, and Total profit functions for AFIRM. Just remember, with your lemonade stand, make sure you keep your costs low and your profits high. And don't forget to wear a big clown hat while doing it!
To derive the Total Revenue (TR), Total Cost (TC), and Total Profit functions, we'll need to use the given information and some basic economic concepts.
Let's start with the Total Revenue (TR) function:
TR = Quantity x Price
The given information states that Afarm manufactures and markets a product that sells for birr 20%. Therefore, the price per unit (P) is birr 20.
The quantity (Q) can vary, but it is limited by a maximum of 10,000 units. So, Q can range from 0 to 10,000.
Now we can write the formula for the Total Revenue (TR) function:
TR = Q x P
= Q x 20
Next, let's calculate the Total Cost (TC) function:
TC = Fixed Costs + Variable Costs
The fixed costs associated with activity total birr 40,000 per month, which are constant regardless of the number of units produced and sold. Therefore, the fixed costs (FC) are birr 40,000.
The variable cost per unit (VC) is birr 10, and it varies based on the quantity (Q) produced and sold. So, the variable costs (VC) can be calculated as:
VC = Q x 10
Now we can derive the Total Cost (TC) function:
TC = FC + VC
= 40,000 + (10 x Q)
= 40,000 + 10Q
Finally, let's calculate the Total Profit (TP) function:
TP = TR - TC
Substituting the previously derived TR and TC equations, we get:
TP = Q x 20 - (40,000 + 10Q)
= 20Q - 40,000 - 10Q
= 10Q - 40,000
Therefore, the Total Revenue (TR) function is TR = 20Q, the Total Cost (TC) function is TC = 40,000 + 10Q, and the Total Profit (TP) function is TP = 10Q - 40,000.
To derive the Total Revenue (TR), Total Cost (TC), and Total Profit functions, we need to understand the relationship between quantity sold and the associated costs and selling price.
Given information:
Selling price per unit = Birr 20
Fixed costs = Birr 40,000 per month
Variable cost per unit = Birr 10
Maximum quantity produced and sold = 10,000 units
Step 1: Calculate the Total Revenue (TR):
TR = Quantity Sold × Selling Price per unit
Step 2: Calculate the Total Cost (TC):
TC = Fixed Costs + (Variable Cost per unit × Quantity Sold)
Step 3: Calculate the Total Profit (Profit, P):
Profit (P) = TR - TC
Let's proceed with the calculations:
Step 1: Calculate the Total Revenue (TR):
TR = Quantity Sold × Selling Price per unit
Step 2: Calculate the Total Cost (TC):
TC = Fixed Costs + (Variable Cost per unit × Quantity Sold)
Step 3: Calculate the Total Profit (Profit, P):
P = TR - TC
Note: To complete the calculations, we need the actual quantity sold. Please provide that information.