The management of a firm wants to introduce a new product. The product will sell for $3 a unit and can be produced by either of two scales of operation. In the first, total costs are TC = $3,500 + $2.7Q. In the second scale of operation, total costs are TC = $7,910 + $2.4Q. What is the break-even level of output for each scale of operation? Round your answers to the nearest whole number. The first scale of operation: units The second scale of operation: units What will be the firm’s profits for each scale of operation if sales reach 14,700 units? Round your answers to the nearest dollar. The first scale of operation: $ The second scale of operation: $ One-half of the fixed costs are noncash (depreciation). All other expenses are for cash. If sales are 11,400 units, will cash receipts cover cash expenses for each scale of operation? Enter your answers as positive values. Round your answers to the nearest dollar. The first scale of operation generates a cash flow of $ . The second scale of operation generates a cash flow of $ . The anticipated levels of sales are the following: Year Unit Sales 1 13,700 2 14,700 3 15,700 4 16,700 If management selects the scale of production with higher fixed cost, what can it expect in years 1 and 2? Round your answers to the nearest dollar. Earnings in year 1: $ Earnings in year 2: $ If the firm selects the scale with higher fixed costs, its earnings in year 1 will be earnings in year 2. If sales reach only 14,700 a year, was the correct scale of operation chosen? Be sure to consider all the factors. should have been preferred.
The management of a firm wants to introduce a new product. The product will sell for $3 a unit and can be produced by either of two scales of operation. In the first, total costs are TC = $3,500 + $2.7Q. In the second scale of operation, total costs are TC = $7,910 + $2.4Q. What is the break-even level of output for each scale of operation? Round your answers to the nearest whole number. The first scale of operation: units The second scale of operation: units What will be the firm’s profits for each scale of operation if sales reach 14,700 units? Round your answers to the nearest dollar. The first scale of operation: $ The second scale of operation: $ One-half of the fixed costs are noncash (depreciation). All other expenses are for cash. If sales are 11,400 units, will cash receipts cover cash expenses for each scale of operation? Enter your answers as positive values. Round your answers to the nearest dollar. The first scale of operation generates a cash flow of $ . The second scale of operation generates a cash flow of $ . The anticipated levels of sales are the following: Year Unit Sales 1 13,700 2 14,700 3 15,700 4 16,700 If management selects the scale of production with higher fixed cost, what can it expect in years 1 and 2? Round your answers to the nearest dollar. Earnings in year 1: $ Earnings in year 2: $ If the firm selects the scale with higher fixed costs, its earnings in year 1 will be earnings in year 2. If sales reach only 14,700 a year, was the correct scale of operation chosen? Be sure to consider all the factors. should have been preferred.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The management of a firm wants to introduce a new product. The product will sell for $3 a unit and can be produced by either of two scales of operation. In the first, total costs are
TC = $3,500 + $2.7Q.
In the second scale of operation, total costs are
TC = $7,910 + $2.4Q.
- What is the break-even level of output for each scale of operation? Round your answers to the nearest whole number.
The first scale of operation: units
The second scale of operation: units
- What will be the firm’s profits for each scale of operation if sales reach 14,700 units? Round your answers to the nearest dollar.
The first scale of operation: $
The second scale of operation: $
- One-half of the fixed costs are noncash (depreciation). All other expenses are for cash. If sales are 11,400 units, will cash receipts cover cash expenses for each scale of operation? Enter your answers as positive values. Round your answers to the nearest dollar.
The first scale of operation generates a cash flow of $ .
The second scale of operation generates a cash flow of $ .
- The anticipated levels of sales are the following:
Year Unit Sales 1 13,700 2 14,700 3 15,700 4 16,700 If management selects the scale of production with higher fixed cost, what can it expect in years 1 and 2? Round your answers to the nearest dollar.
Earnings in year 1: $
Earnings in year 2: $
If the firm selects the scale with higher fixed costs, its earnings in year 1 will be earnings in year 2.
If sales reach only 14,700 a year, was the correct scale of operation chosen? Be sure to consider all the factors.
should have been preferred.
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