Q2. Suppose a management accountant of a manufacturing company give you the following information: - At the selling price of OMR 1000 the quantity sold is 175 units per month. - At the selling price of OMR 1800 the quantity sold is 125 units per month. - The variable cost per unit is OMR 920. - The fixed cost is OMR 24000. Required: i. From the above information, formulate the price function (P=a - bQ), and the cost function (C = a + bQ) of this company. ii. Using the functions which you formulated, determine the following: a. Profit maximizing quantity. b. Profit-maximizing price. c. Maximum profit value. d. Revenue-maximizing quantity.

Q2. Suppose a management accountant of a manufacturing company give you the following information: - At the selling price of OMR 1000 the quantity sold is 175 units per month. - At the selling price of OMR 1800 the quantity sold is 125 units per month. - The variable cost per unit is OMR 920. - The fixed cost is OMR 24000. Required: i. From the above information, formulate the price function (P=a - bQ), and the cost function (C = a + bQ) of this company. ii. Using the functions which you formulated, determine the following: a. Profit maximizing quantity. b. Profit-maximizing price. c. Maximum profit value. d. Revenue-maximizing quantity.

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 9E

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swered Costs per Unit (dollars) 1000 900 800 700 600 500 400 300 200 100 0 4 Average total cost B Marginal cost Output (units per day) Average variable cost Average fixed cost 22 24 How many units of output should be produced per day if the price of the product is $600/unit? (provide an approximate answer in whole numbers)
A recent engineering was given the job of determining the best production rate for a new type of casting in a foundry. After experimenting with many combinations of hourly production rates and total production cost per hour, he summarized his findings in table below (column 2). The engineering then talked to the firm’s marketing specialist, who provided estimates of selling price per casting as a function of production output (see table 1 column 3). There are 8,760 hours in a year. What production rate would you recommend to maximize total profits per year? a) 100 ; b) 200 ; c) 300 ; d) 400 ; e) 500 Show handwritten solutions.
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