HW 2 Solution

# HW 2 Solution - CSA 273 Problem#1 Solutions to Homework#2...

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CSA 273                  Solutions to Homework #2 Problem #1 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) Break even point = F/(P-V) = \$6000/(\$20-\$15) = 1200 units (b) Total Revenue = (2500)*(\$20) = \$50,000 Total cost = F + 2500*V = \$6000 + (2500)*(\$15) = \$43,500 Profit = Total Revenue - Total Cost = \$50,000-\$43,500 = \$6,500 (c) Extra profit = 600*(\$20-\$17) = \$1800 (d) Extra profit (or loss) of extra 600 units = Profit (or loss) of first 200                                             +Profit (or loss) of last 400                                           = 200*(\$20-\$17) + 400 (\$10-\$17)                                           = \$600 - \$2800
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