Cost Analysis for Production and Profit
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ScribdTranslationsCost Analysis for Production and Profit
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ScribdTranslationsProduction
Production Rent Supplies CF + CV CFP = CF / Q
Coffee rates per hour Fixed Cost Costo VariableCosto Total Costo Fijo Pr
0 $ 3.00 $ - $ 3.00
1 $ 3.00 $ 0.30 $ 3.30 $ 3.00
2 $ 3.00 $0.80 $ 3.80 $ 1.50
3 $ 3.00 $ 1.50 $ 4.50 $ 1.00
4 $ 3.00 $2.40 $ 5.40 $ 0.75
5 $ 3.00 $ 3.50 $ 6.50 $ 0.60
6 $ 3.00 $ 4.80 $ 7.80 $0.50
7 $ 3.00 $6.30 $ 9.30 $ 0.43
8 $3.00 $ 8.00 $ 11.00 $0.38
9 $ 3.00 $ 9.90 $12.90 $ 0.33
10 $3.00 $ 12.00 $ 15.00 $ 0.30
CVP = CV/Q CTP = CFP + C CTP = CT / Q Cmg = (CT2 - CT1) / (Q2- Q1)
Costo Variabl Costo total pr Costo total pr Costos Marginales
$ 0.30 $ 3.30 $ 3.30 $ 0.30
$ 0.40 $ 1.90 $ 1.90 $ 0.50
$ 0.50 $ 1.50 $ 1.50 $ 0.70
$ 0.60 $ 1.35 $ 1.35 $ 0.90
$0.70 $1.30 $ 1.30 $ 1.10
$ 0.80 $ 1.30 $ 1.30 $ 1.30
$0.90 $ 1.33 $ 1.33 $ 1.50
$ 1.00 $ 1.38 $ 1.38 $ 1.70
$ 1.10 $ 1.43 $ 1.43 $ 1.90
$ 1.20 $ 1.50 $1.50 $ 2.10
Suppose that Honda's total costs to manufacture 4 cars
They are $225,000 and the total costs of producing 5 are $250,000. What is the total cost?
average cost of producing 5 cars? What is the marginal cost of the fifth car?
CTP = CT / Q (CT2-CT1)/(Q2 - Q1)
Cars Total cost CTP Cmg
4 $ 225,000 $ 56,250
5 $ 250,000 $ 50,000 $ 25,000
Draw the marginal cost curve and the average total cost curve of a company
Typical and explain why these curves intersect at the point they do.
This relationship between average total cost and marginal cost has an important
corollary: the marginal cost curve intersects the average total cost curve at its point
lower. Why? At low production levels, the marginal cost is below
of the average total cost, which decreases this last. But after the
two curves intersect, the marginal cost is above the average total cost.
Due to the reasons stated, the average total cost will begin to increase starting
from this level of production. Thus, this intersection point is the average total cost.
minimum. As we will see in the next chapter, the minimum average total cost plays a role
a very important role in the analysis of competitive companies.
o
n/a
Nimbus, Inc. manufactures brooms and sells them for
door to door. The following is presented
the relationship between the number of workers and the
Nimbus production on a regular day:
T Q (Q2-P1)/ (Q2-T1) CT = CF+ CV CF = CT - CV
Workers Production Total cost CF
Marginal Product
0 0 $ 200 $ 200
1 20 20 $ 300 $ 200
2 50 30 $ 400 $ 200
3 90 40 $ 500 $ 200
4 120 30 $600 $200
5 140 20 $ 700 $ 200
6 150 10 $ 800 $ 200
7 155 5 $ 900 $ 200
a. Fill in the marginal product column.
What pattern do you observe? How do you explain it?
Up until worker #3, the average is increasing and starting from #4
begins to decrease, due to a saturation of the
fixed factors such as machines
b) A worker costs $100 per day and the
Your company has fixed costs of $200. Use
this information to fill the column of
costo total.
c. Fill in the average total cost column.
(Remember that CTP = CT/Q.) What pattern
do you observe?
It starts decreasing, reaches a minimum point, and begins to increase again. Its graph
d) Now fill in the marginal total cost column.
(Remember that CM = ΔCT/ΔQ.) What
Does the boss observe?
45
40
35
30
25
20
15
10
0
1 2 3 4 5 6 7 8
Marginal Product CTmg
When the marginal product (Pmg) increases, the marginal cost (CTmg) decreases, but when the marginal product begins to decrease and ...
They have an inverse relationship
f) Compare the average total cost column
and the marginal cost column. Explain it
relationship.
$ 25
$20
$ 15
$10
$5
$0
1 2 3 4 5 6 7 8
CTP CTmg
When Ctmg < CTP, CTP decreases. The moment Ctmg begins to be greater than
CV = CT - CF CTP = CT / Q (CT2-CT1)/(Q2-Q1)
CV CTP CTmg
$0
$ 100 $ 15.0 $ 5.0
$ 200 $ 8.0 $ 3.3
$ 300 $ 5.6 $ 2.5
$ 400 $ 5.0 $ 3.3
$ 500 $ 5.0 $ 5.0
$ 600 $ 5.3 $ 10.0
$ 700 $ 5.8 $ 20.0
it is like a U
the CTmg starts to increase
The CTP, then the slope of the CTP curve also increases.
Consider the following cost information from
a pizzeria
CF = CT - CV (CT2 - CT1 / Q2 - Q1)
Cantdad Costo Total Costo Variable Costo Fijo Cmg CT
0 $ 300 $0 $ 300
1 $ 350 $ 50 $300 $50
2 $ 390 $ 90 $ 300 $ 40
3 $ 420 $ 120 $ 300 $30
4 $ 450 $150 $300 $ 30
5 $ 490 $ 190 $300 $ 40
6 $ 540 $ 240 $ 300 $ 50
a. What is the fixed cost of the pizzeria?
$300
b. Create a table in which you will calculate the cost
marginal per dozen of pizzas using the
information on total costs. In addition,
calculate the marginal cost per dozen using
the information about the variable cost.
What is the relationship between these figures?
Comente.
R/ The Cmg variable is equal to the total Cmg because it is the cost.
variable that generates changes in the total cost.
(CV2 - CV1 / Q2 - Q1)
Cmg CV
$ 50
$ 40
$30
$30
$ 40
$50
Suta is thinking about opening a hardware store.
It will cost $500,000 a year to rent the
local and buy the merchandise. Additionally, she would have
to resign from her job as an accountant
in which he earns $50,000 a year.
a. Define opportunity cost.
The opportunity cost of opening a hardware store would be the benefit that is lost.
working as an accountant means $50,000 a year
b. What is the opportunity cost of suta
to manage the hardware store for a year? Yes
Suta thought that he could sell $510,000 in Benefit of opening the faith
merchandise per year, should I open the hardware store?
Explain. CDF = 500,000
R/ BDF = 510,000
YES NO
3 Benefit of Working
CDT= 0
Beneficios = Ingresos totales - Costos BDT= 50000
Benefits = Total income - (direct cost + indirect cost)
Profits = 510,000 - (500,000 + 50,000) Costo de Ferreteria
Beneficio = -40000 CF = 500,000
Cost of working
CT 510,000
to get off
hardware store