Question

1. Engineering estimates show that the variable cost of manufacturing a new product will be ​$31

per unit. Based on market​ research, the selling price of the product is to be ​$132 per unit and variable selling expense is expected to be ​$10 per unit. The fixed costs applicable to the new product are estimated to be ​$2900 per period and capacity is

140 units per period. Find algebraic statements for the revenue function

2. Engineering estimates show that the variable cost of manufacturing a new product will be ​$31

per unit. Based on market​ research, the selling price of the product is to be ​$132 per unit and variable selling expense is expected to be ​$10 per unit. The fixed costs applicable to the new product are estimated to be ​$2900 per period and capacity is

140 units per period. Find algebraic statements for the cost function

3. A firm manufactures a product that sells for ​$24

per unit. Variable cost per unit is $7 and fixed cost per period is $1360. Capacity per period is 2500

units. Develop an algebraic statement for the revenue function

4. A firm manufactures a product that sells for ​$24

per unit. Variable cost per unit is $7 and fixed cost per period is $1360. Capacity per period is 2500

units. Develop an algebraic statement for the cost function.

5. A firm manufactures a product that sells for ​$24

per unit. Variable cost per unit is $7 and fixed cost per period is $1360. Capacity per period is 2500

units. ​Determine the number of units required to be sold to break even (round to the nearest full unit).

Answer 1

1) Revenue = Price * Quantity

So, equation for total revenue =

R( Quantity) = 132 * Quantity

2) The cost function will be =

Total cost (C(Quantity)) =

= 2900 + 31* Quantity + 10 * Quantity

3) Total revenue function, R(Q) = 24 * Quantity

4) Total cost function, C(Q) = 1360 + 7 * Quantity

5) The breakeven point will be the number of quantity where the total cost will be equal to the total revenue.

Total cost = Total revenue

= 24 * Quantity = 1360 + 7 * Quantity

= 17 * Quantity = 1360

= Quantity = 80 units.

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