PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 10, Problem 15PS
Fixed and variable costs In a slow year, Deutsche Burgers will produce 2 million hamburgers at a total cost of $3.5 million. In a good year, it can produce 4 million hamburgers at a total cost of $4.5 million.
- a. What are the fixed costs of hamburger production?
- b. What are the variable costs?
- c. What is the average cost per burger when the firm produces 1 million hamburgers?
- d. What is the average cost when the firm produces 2 million hamburgers?
- e. Why is the average cost lower when more burgers are produced?
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In a slow year, Deutsche Burgers will produce 3.2 million hamburgers at a total cost of $4.6 million. In a good year, it can produce 6.2
million hamburgers at a total cost of $6.4 million.
a. What are the fixed costs of hamburger production? (Do not round intermediate calculations. Enter your answer in millions
rounded to 3 decimal places.)
b. What is the variable cost per hamburger? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
c. What is the average cost per burger when the firm produces 3 million hamburgers? (Do not round intermediate calculations.
Round your answer to 2 decimal places.)
d. What is the average cost per burger when the firm produces 4 million hamburgers? (Do not round intermediate calculations.
Round your answer to 2 decimal places.)
e. Why is the average cost lower when more burgers are produced?
a. Fixed cost
million
b. Variable cost
per burger
c. Average cost
d. Average cost
per burger
per burger
e. Why is the average cost lower…
In a slow year, Deutsche Burgers will produce 3.5 million hamburgers at a total cost of $5.3 million. In a good year, it can produce 5.5 million hamburgers at a total cost of $6.2 million.
a. What are the fixed costs of hamburger production? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)
b. What is the variable cost per hamburger? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
c. What is the average cost per burger when the firm produces 3 million hamburgers? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
d. What is the average cost per burger when the firm produces 4 million hamburgers? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
e. Why is the average cost lower when more burgers are produced?
In a slow year, Deutsche Burgers will produce 3.2 million hamburgers at a total cost of $4.6 million. In a good year, it can produce 6.2
million hamburgers at a total cost of $6.4 million.
a. What are the fixed costs of hamburger production? (Do not round intermediate calculations. Enter your answer in millions
rounded to 3 decimal places.)
b. What is the variable cost per hamburger? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
c. What is the average cost per burger when the firm produces 3 million hamburgers? (Do not round intermediate calculations.
Round your answer to 2 decimal places.)
d. What is the average cost per burger when the firm produces 4 million hamburgers? (Do not round intermediate calculations.
Round your answer to 2 decimal places.)
e. Why is the average cost lower when more burgers are produced?
a. Fixed cost
million
b. Variable cost
per burger
per burger
c. Average cost
d. Average cost
per burger
e. Why is the average cost lower…
Chapter 10 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 10 - Terminology Match each of the following terms to...Ch. 10 - Project analysis True or false? a. Sensitivity...Ch. 10 - Sensitivity analysis Otobais staff (see Section...Ch. 10 - Prob. 4PSCh. 10 - Prob. 7PSCh. 10 - Scenario analysis What is the NPV of the electric...Ch. 10 - Prob. 9PSCh. 10 - Break-even analysis Break-even calculations are...Ch. 10 - Prob. 11PSCh. 10 - Prob. 12PS
Ch. 10 - Prob. 13PSCh. 10 - Break-even analysis A financial analyst has...Ch. 10 - Fixed and variable costs In a slow year, Deutsche...Ch. 10 - Operating leverage You estimate that your cattle...Ch. 10 - Prob. 17PSCh. 10 - Prob. 20PSCh. 10 - Real options Explain why options to expand or...Ch. 10 - Prob. 22PSCh. 10 - Real options True or false? a. Decision trees can...Ch. 10 - Prob. 24PSCh. 10 - Real options An auto plant that costs 100 million...Ch. 10 - Decision trees Look back at the Vegetron electric...Ch. 10 - Prob. 27PSCh. 10 - Prob. 28PSCh. 10 - Prob. 29PSCh. 10 - Prob. 32PS
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