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.

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.

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:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 5E

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