Question

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A manufacturer of 24-hr variable timers has a monthly fixed cost of $30,000 and a production cost of $8 for each timer manufactured. The units sell for $13 each. (a) Sketch the graphs of the cost function and the revenue function, and thereby find the break-even point graphically. (Use lines.) Actions Tools 20000 Son Oect Propee Point 1 9 Helps WAssign graphing tool (b) Find the break-even point algebraically -( x, ) (c) Sketch the graph of the profit function. (Use a ine.) Tesis a w esc & 7 5 3 2 P Y U T W ab K D A lock M V C A CO <6 LL st LUI

Answer 1

Solution Fixed cost = $39.oo (total) This will not change despite the change in level of production, Variable cost po- $B This to to ist will increase with the increase in production Selling price pu = $13. Before plotting the graph, we will have to calculate the cast, sale and ment level of production which con de done with the help of the following table: - Level of Biodu (1) Fixed cost Total Cost (2+3)= 4 Total Vaniable cost 13) looo x 8 Boso Total Pusfit T sevenle is I (Loss) = 5-416 13 x loco (2500) -13060 1060 3000 3 Boso doso 30,000 ತಿಂಗ - 16000 46000 13 x2000 = 26000 (2000) 3000 Зора 3000X8 - 24000 54000 3x3000 = 39000 Cisos 30,000 4080 Byooox 8 = 32000 62ooo 13x yor -52050 (loooo) 5ooo Soosex 8 40000 30,000 70000 13x000 = 6500D (500) 78000 6000 Xb =48000 6000 3,000 13x6000 = 7800 860150 5000 700 30,000 7000x8 - 56000 Boox 8 - 64000 13x 7050 - 91ooo 13 x 8000 104000 loot 30,000 94000 Boso

9000 3000 9060x8 = 72000 lo2000 13% 9000 = 11 15500 Too 3o poo 130xB = Boco 10,000 13x10,000 1 = 130,000 20,ood SID=09 Now, (a) Plotting the graph. Sagorol Boco 12.00 o00oo- Soon (6000, 78000) 70000 3 Xos Soooo 40000 - తెరంగం ooooo TO 10000 0 1000 2000 3000 4000 + 50000000 700 + 800 + 9000 1000 X axis - no. of units yax18 = amount Line A= lost function Line B- revenue function or

break even point = point at which Line A Intersects line B). ie, wy(6000, 78000) which moons when 6000 units are produced, cost revenus 78000 ting graph for profit function, X axis = no of unite yaxis = amount line ca amount of profit Ilors. 30000 20000+ Oooot (6000, X looo loco yooo 3000 6000 7000 8000 100do 9000 -10000 -3000 d) The line c (profit function) cusses the xax's when the amount of profit is zow, ie at the breakeven point. luy) = (600,0).