HW 1 Solution

# HW 1 Solution - CSA 273 Solutions to Homework Set#1...

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CSA 273 Solutions to Homework Set #1 Problem #1 (a) Let Q = daily sales volume in airline tickets (\$) R(Q) = .20Q = Revenues per day TC(Q)=47,500/250 + .05Q = 190 + .05Q = Total cost per day. To break even, find Q such that R(Q)=TC(Q) .20Q = \$190 + .05Q Q = \$1266.67 (b) Let P=new commission rate Q=\$1000 R(Q)=1000P TC(Q)=(47,500 + 250)/250 + .05(1000)=191+50=241 R(Q)=TC(Q) at the break even point. 1000P=241 => P=.241=24.1% Problem #2 Let Q = Number of units produced and sold during each time period. P = Selling price per unit. F = Fixed cost per period V = Variable cost per unit per period (a) Q=F/(P-V) Q=50,000, F=\$19,000, v=\$.12 per unit, Solve for P P=V+F/Q=.12/unit +\$19,000/50,000 units = \$.50 per unit. (b) Using the same selling price computed in (a), the profit from the first 50,000 units would be zero. The profit from the next 20,000 = 20,000(P-V-.03) = 20,000(.50-.12-.03)= \$7,000 Problem #3 The following spreadsheet covers the calculations required in (a),(d), and (e) Production

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HW 1 Solution - CSA 273 Solutions to Homework Set#1...

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