How I can resolve this problem. The management of a firm wants to introduce a new product. the product will sell for $4 a unit and can be produced by either of two scales of operation. in the first, total cost are. TC= $3,000 +$2.8Q In the second scale of operation, total cost are TC=$5,000+$2.04Q a. what is the break-even level of outpur for each scale of operation? b. what will be the firm;s profit for each scale of operation if sales reach 5,000 units? c. one-half of the fixed cost are noncash(depreciation) . all other expenses are for cash. if sale are 2,000 units, will cash receipts cover cash expenses for each scale of operation? d. the anticipaded levels of sales are the following: Year Unit Sales 1 4,000 2 5000 3 6,000 4 7,000 If management selects the scale of production which higher fixed cost, what can it expect in years i and 2? On what grounds can managemetn justify selecting this scale of operation? If sales reach only 5,000 a year was the correct scale operation chosen?
How I can resolve this problem.
The management of a firm wants to introduce a new product. the product will sell for $4 a unit and can be produced by either of two scales of operation. in the first, total cost are.
TC= $3,000 +$2.8Q
In the second scale of operation, total cost are
TC=$5,000+$2.04Q
a. what is the break-even level of outpur for each scale of operation?
b. what will be the firm;s profit for each scale of operation if sales reach 5,000 units?
c. one-half of the fixed cost are noncash(depreciation) . all other expenses are for cash. if sale are 2,000 units, will cash receipts cover cash expenses for each scale of operation?
d. the anticipaded levels of sales are the following:
Year Unit Sales
1 4,000
2 5000
3 6,000
4 7,000
If management selects the scale of production which higher fixed cost, what can it expect in years i and 2? On what grounds can managemetn justify selecting this scale of operation? If sales reach only 5,000 a year was the correct scale operation chosen?
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
