Submitted by: Submitted by himalaya
Views: 300
Words: 573
Pages: 3
Category: Business and Industry
Date Submitted: 10/14/2010 03:11 AM
Part-A1
a Cost is dependent variable, sales independent variable.
b Variable cost = (1500-750)/(4000-1000)=25%
Fixed cost = 1500-4000*25%=$500
Equation
y = 0.25x+$500
c [pic]
d When volume goes beyond a limit, the fixed costs would change and that would change the relationship.
e C(2000) = 2000*.25+500 = $1000
This means when sales are 2000, cost is $1000.
f Profit = sales – cost =$ 2000 – $1000 = $1000.
g For profit = 2500
Sales = (2500+500)/(1-25%) =$4000.
A-2
a Variable drink cons.= (1720-1480)/(320-260) = 4
Fixed drink cons. = 1720-320*4 = 440
Equation
y = 4x+440
b Number of canned drinks for Residence C
Equation, y = 4x+ 440
= 4*600+440
= 2840 canned drinks
A-3
a Sale price = 500000/10000 = $50
Variable cost = (1050000-600000)/(25000-10000) = $30 p. u.
Fixed cost = 600000-30*10000 = $3000000
Revenue function
R(x) = 50x
Cost function
C(x) = 30x+$300000
Profit function
P(x) = 50x-30x-$300000
b Break even point = 300000/(50-30) = 15000 units
A-4
a Purchasing cost = 0.50*70000 = $35000
Internally produced cost = 0.40*70000 + 10000 = $38000
They should purchase from outside as it would save $3000(38000-35000).
b Break even point = 10000/(0.50-0.40) = 100000 units
After 3years it will be benificial producing internally.
A-5
a Fixed cost = 1000
Contribution ratio = (145-100 – 0.12*145)/145 = 19.03%
Break even sales = 1000/19.03% = 5253.62
b Profit on 80000 = (80000*0.1903) – 1000 = $14227.59
A-6
a 0.52q is the variable portion of total cost and q is the quantity.
$30000 is the fixed portion of total cost that is fixed cost.
b sale price per unit = $0.80
Revenue function
R(q) = 0.80q
P(q) = R(q) – C(q)
= 0.80q-0.52q-$30000
= 0.28q-$30000
c $250000 = 0.28q-$30000
q = 1000000 units
Part-B
B-1
a Variable cost function = 0.001X2 +0.5X
b Average cost function = (0.001X2...