XYZ company’s cost function for the next four months is
C = 600,000 + 8Q
a) Find the BEP dollar volume of sales if the selling price is br. 10 / unit
b) What would be the company’s cost if it decides to shut down
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?
(a) revenue = price*quantity, so the BEQ is when C(q) = R(q):
600000+8q = 10q
(b) since q=0, the cost would be 600,000
(c) good to shut down if C(100,000) > R(100,000)