Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Question
Chapter 9, Problem 5E
a
To determine
To find:Company's breakeven dollar sales volume.
b)
To determine
To ascertain:Sale volume required to earn the target profit of $3 million.
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McKee Corporation has annual fixed costs of $36 million. Its variable cost ratio is 0.60.
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Marginal Cost
A division of Ditton Industries manufactures a deluxe toaster oven. Management has determined that the daily marginal cost function associated with producing these toaster ovens is given by
C'(x) = 0.0006x2 − 0.14x + 22
where C'(x) is measured in dollars per unit and x denotes the number of units produced. Management has also determined that the daily fixed cost incurred in the production is $900.
(a)Find the total cost incurred by Ditton in producing the first 300 units of these toaster ovens per day.
(b)
What is the total cost incurred by Ditton in producing the 201st through 300th units/day?
A manufacturing company produces solar panels. The variable costs are $20 per unit and fixed costs are
$10,875. The price demand relationship for this product is P=-0.25Q+ 250, where P is the unit sales
price of the product and Q is the demand of solar panels. Given the following:
• Total cost = Fixed cost + Variable cost
• Revenue = Demand x Price
• Profit = Revenue - Total cost
26. The equation that represent the total cost is:
a. ($10,875+$20) Q
b. $10,875-$20 Q
c. $10,875 × $20 Q
d. $10,875+$20 Q
27. The equation that represent the total revenue is:
a. $0.25Q²+$250Q
b. - $0.25Q²+$250Q
c. - $0.25Q²-$250Q
d. $0.25Q²-$250Q
Chapter 9 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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Similar questions
- What will be the accounting profit of the firm if the total revenue is $1020 and the explicit cost is $350arrow_forwardThe revenue function R(x) and the cost function C(x) for a particular product are given. These functions are valid only for the specified range of values. Find the number of units that must be produced to break even. R(x) = 200x - x; C(x) = 5x+ 7250; 0sxs 100 The manufacturer must produce units to break even.arrow_forwardThornton Enterprises produces a product with fixed costs of $18,100 and variable cost of $4.10 per unit. The company desires to earn a $27,000 profit and believes it can sell 11,000 units of the product.arrow_forward
- You have charged your client $8,650 on a cost plus percentage purchase of two sofas, two lounge chairs, and three occasional tables. If the occasional tables were 30% of the total client cost, and all cost the same amount, what was the net price of these tables at a 15% markup? Explain.arrow_forwardA company makes solar panels. The company's revenue function, in dollars, is R(n)= 10n , where n is the number of panels produced. The cost function is C(n) = 100(2)30 . R and C are shown on the graph below. 1000 800 600 400 200 20 40 60 80 100 1 Number of Panels a) Estimate from the graph i) the break-even points e) How would your answers for break-even points and maximum profit change if i) the number of dollars of revenue per panel is increased slightly? ii) the cost function is changed to C(n)=100(2)35 ? f) What does the number that was changed in part e) ii) represent? Dollarsarrow_forwardCarlota Music Company estimates that the marginal cost of manufacturing its Professional Series guitars is C ′ (x) = 0.02x + 100 dollars/month when the level of production is x guitars/month. The fixed costs incurred by Carlota are $4000/month. Find the total monthly cost incurred by Carlota in manufacturing x guitars/month.arrow_forward
- Your small toy manufacturing facility has the following information: Fixed costs $39,000 Material cost per toy $0.888 Electricity cost per toy $0.044 Labor cost per toy $0.207 Management demands that we have $9,000 in profit if we sell 45,000 toys. What must the selling price be to achieve this? (Enter three decimal places)arrow_forwardStraker Industries estimated its short-run costs using a U-shaped average variable cost function of the form AVC = a + bQ + cQ2 and obtained the following results. Total fixed cost (TFC) at Straker Industries is $1,000. DEPENDENT VARIABLE: AVC R-SQUARE F-RATIO P-VALUE ON F OBSERVATIONS: 35 0.8713 108.3 0.0001 VARIABLE PARAMETER ESTIMATE STANDARD ERROR T-RATIO P-VALUE INTERCEPT 43.40 13.80 3.14 0.0036 Q −2.80 0.90 −3.11 0.0039 Q2 0.20 0.05 4.00 0.0004 If Straker Industries produces 12 units of output, what is estimated short-run marginal cost (SMC)? a. $28.04 b. $62.60 c. $32.40 d. $33.33arrow_forwardCalculate the explicit cost if accounting profit is $3000 and the total revenue is $3900arrow_forward
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