2. In its first year, “ABC Co.” had the following experience
Sales = 25,000 units Selling price = br. 100
TVC = br. 1,500,000 TFC = br. 350,000
Required:
A. Develop Revenue, cost & profit functions for the co. in terms of quantity.
B. Find the Breakeven point in terms of quantity
C. Find the Break-even revenue
yes
cost c(x) = 60x+350,000
revenue r(x) = 100x
profit p(x) = r(x)-c(x) = 40x - 350000
p(x)=0 at x=8750
r(8750) = 875,000
I do not know
A. To develop the revenue, cost, and profit functions for the company in terms of quantity, we can use the following formulas:
1. Revenue (R) = Quantity (Q) x Selling Price (SP)
In this case, the selling price is 100, so the revenue function would be:
R = 100Q
2. Total Variable Costs (TVC) = Quantity (Q) x Variable Cost per Unit (VC)
The variable cost per unit is not provided in the information given. If you have the variable cost per unit, you can substitute it into the formula to calculate the total variable costs.
3. Total Fixed Costs (TFC) = Fixed Costs (FC)
The fixed costs are given as 350,000, so the total fixed costs function would be:
TFC = 350,000
4. Total Costs (TC) = TVC + TFC
If you have calculated the total variable costs using the formula in step 2, you can substitute it here to calculate the total costs.
5. Profit (P) = Revenue (R) - Total Costs (TC)
If you have calculated the revenue and total costs using the formulas above, you can substitute them here to calculate the profit.
B. The break-even point in terms of quantity is the point where the company's total revenue equals its total costs, resulting in zero profit. To find the break-even point, set the profit function from step 5 to zero and solve for quantity (Q).
C. To find the break-even revenue, multiply the break-even quantity (found in step B) by the selling price (100) to get the break-even revenue.