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Cost and Profit Analysis for Production

The document provides information about the total cost, revenue, and profit functions of two different companies. For the first company, it is determined that the total cost is $300,000 for 1,000 units and $400,000 for 2,000 units. The marginal cost is $100 per unit and the fixed cost is $200,000. The break-even quantity is calculated to be 2,500 units with a break-even sales volume of $450,000. For the second company, total costs are provided for sales volumes of $15,000 and $25,000. The variable cost per dollar of sales is calculated to be $0.47 and the fixed cost is $29,

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Mosharraf Hossain
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59 views2 pages

Cost and Profit Analysis for Production

The document provides information about the total cost, revenue, and profit functions of two different companies. For the first company, it is determined that the total cost is $300,000 for 1,000 units and $400,000 for 2,000 units. The marginal cost is $100 per unit and the fixed cost is $200,000. The break-even quantity is calculated to be 2,500 units with a break-even sales volume of $450,000. For the second company, total costs are provided for sales volumes of $15,000 and $25,000. The variable cost per dollar of sales is calculated to be $0.47 and the fixed cost is $29,

Uploaded by

Mosharraf Hossain
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

A company has a linear total cost function and has determined that over the next

three month it can produce 1000 units at a total cost of [Link] same
manufacture can produce 2000 units at a total cost of [Link] units sell for 180
each:
a)determine the revenue cost and profit functions using q for number of units
300 000 = 1000X + C ..(i)
400 000 = 2000X + C ..(ii)
ii) i)
100 000 = 1000X
X = 100
Total cost ; Y = 100q +200 000
Revenue = 180* q
Profit = Revenue Total cost = 180q -100q -200 000

b)what is the fixed cost? : 200 000


c) what is the marginal cost? 100
d)find the break even quantity?
180q -100q- 200 000 = 0
80 q = 200 000
q = 2500
e)what is the break even dollar volume of sales?
2500 * 180 = 450 000

A company has a linear total cost function and has determined that it has a total
cost of 36836 on sales of [Link] same company has a total cost of 41536 on
sales of 25000 find
a)

determine the revenue cost and profit functions using s for sales volume

Where,
d = selling price
x = variable cost/unit
Profit = revenue total cost
= s*d sX C
Quantity q1 for making sales 15000;

15000 = q1*d q1 = 15000/d


25000 = q2 *d q2 = 25000/d
Total cost Y = X*q +C
36836 = X* (15000/d) +C .i)
41536 = X *(25000/d)+C ii)
ii)- i)
4700 = 10 000(X/d)
X/d = 0.47
b)the variable cost per dollar of sale = 0.47
c)the fixed cost
36836 = X* (15000/d) +C
C = 29786 [X/d = 0.47]
d)the variable cost on sales of 72000
Y = X * q3 + 29786
Y = X* (72000/d) +29786
Y = X/d *72000 +29786
Y = 0.47 *72000 + 29786
Y = 33840 +29786
Y = 63626
The variable cost is = 33840
e)the total cost on sales of 72000
total cost 63626
f)the break even dollar volume of sales
Profit = 0 = revenue total cost = 72000 -63626 = 8374
g)the net profit before taxes on sales of 80000

Profit = 80000 0.47*80000 -29786 = 12614

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