Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Chapter 5, Problem 63P
(a):
To determine
Annual worth method.
(b):
To determine
Calculate the
(c):
To determine
Other factors.
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A small company manufactures a certain product. Variable costs are $20 per unit and fixed costs are $10,875. The price demand relationship for this product is
P = -0.25D + 250, where P is the unit sales price of the product and D is the annual demand. Total cost = fixed cost + Variable cost, TC = CF + CV
Revenue = Demand x Price, TR = D x P
Profit = Total Revenue – Total Cost, P = TR – TC
a) Develop the equations for the total cost and total revenue.
b) Find the breakeven quantity
c) How many units must be sold to maximize profit?
d) What is the company’s maximum profit?
A small company manufactures a certain product. Variable cost are $20 per unit and fixed cost are $10,875. The price-demand relationship of this product is P = -0.25D + 2550, where P is the unit sales price of the product and D is the annual demand. Find the Total Cost, Total Revenue and Profit.
A company produces an electronic timing switch that is used in consumer and commercial products. The fixed cost (CF ) is $73,000 per month, and the variable cost (cv) is $83 per unit. The selling price per unit is p = $180 − 0.02(D). For this situation, (a) determine the optimal volume for this product and confirm that a profit occurs (instead of a loss) at this demand. (b) find the volumes at which breakeven occurs; that is, what is the range of profitable demand? Solve by hand and by spreadsheet.
Chapter 5 Solutions
Engineering Economy (17th Edition)
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