XYZ company’s cost function for the next four months is
C=500,000+5Q
a) Find the BE dollar volume of sales if the selling price is br.6/unit
b) What would be the company’s cost if it decides to shut down operatios for the next four months
c) If, because of strike ,the most company can produce is br.100,000 units ,should it shutdown? Why or why not?
(a) BE is when revenue = cost, so
0.6q = 500,000+5q
(b) what is c(0)?
(c) compare 0.6 * 100,000 with 500,000 + 5*100,000
a) To find the break-even (BE) dollar volume of sales, we need to set the cost function equal to the revenue function and solve for Q.
The revenue function can be determined by multiplying the selling price per unit by the quantity sold (Q). In this case, the selling price is br.6/unit.
So, the revenue function, R, is given by:
R = 6Q
Setting the cost function equal to the revenue function gives us:
500,000 + 5Q = 6Q
Now, we can solve for Q:
500,000 = 6Q - 5Q
500,000 = Q
Therefore, the BE dollar volume of sales is br.500,000.
b) If the company decides to shut down operations for the next four months, it means that no units will be produced or sold. In this case, the cost would be equal to the fixed cost component of the cost function, which is br.500,000.
c) If the maximum the company can produce due to a strike is br.100,000 units, we can determine the cost associated with producing and selling these units.
Substituting Q = 100,000 into the given cost function C, we get:
C = 500,000 + 5(100,000)
C = 500,000 + 500,000
C = br.1,000,000
The cost to produce and sell br.100,000 units is br.1,000,000.
Now, we need to compare this cost to the revenue generated by selling these units.
Revenue = selling price per unit * quantity sold
Revenue = 6 * 100,000
Revenue = br.600,000
Since the revenue of br.600,000 is greater than the cost of br.1,000,000, it is not advisable to continue operations in this scenario. The company would have a loss of br.400,000 (br.600,000 - br.1,000,000) if it chooses to produce and sell br.100,000 units.
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i need more concepts about qustions
XYZ company’s cost function for the next four months is
C = 500,000 + 5Q
a) Find the BE dollar volume of sales if the selling price is br. 6 / unit
b) What would be the company’s cost if it decides to shutdown operations for
the next four months
c) If, because of strike, the most the company can produce is br. 100,000
units, should it shutdown? Why or why not?
2. In its first year, “Abol Buna Co” had the following experience
Sales = 25,000 units Selling price = br. 100
TVC = br. 1,500,000 TFC = br. 350,000
Required:
1. Develop Revenue, cost & profit functions for the co. in terms of quantity.
2. Find the Breakeven point in terms of quantity
3. Convert the cost equation in terms of quantity in to a cost equation in terms of
revenue
4. Find the Breakeven revenue
5. If profit had been br. 500,000 what would have been the sales volume (revenue)
& the quantity of sales
6. What would have been the profit if sales are br. 2,000,000.
3. A small home business set up with an investment of $ 10,000 for equipment. The
business manufactures a product at a cost of br. 0.64 per unit. If the product sales
for Br. 1.20 per unit how many units must be sold before the business breaks
even?
4. A retail co. plans to work on a margin of 44% of retail price & to incur other
Variable Cost of 4%. If is expected Fixed cost of Br. 20,000.
i. Find the equation relating Total Cost to sales
ii. Find the profit if sales are Br. 60,000
iii. Find the breakeven revenue�