Homework (WK4)

# Homework (WK4) - (900 4.50x x =.25(5.50x(900 4.50x...

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Week 4 CH7, Pg216, P8 Assume a fixed cost of \$900, a variable cost of \$4.50 and a selling price of \$5.50. (a) What is the break-even point, (Pages 207-208)? The profit function is y = (5.5 - 4.5) x - 900 = x - 900 y = 1x-900 = x - 900 The break-even point is x = 900 (b) How many units must be sold to make a profit of \$500? 500 x - 900 < = > x = (900+500)/(5.50-4.50) = 1400 (c) How many units must be sold to average \$0.25 profit per unit? \$0.50 per unit? \$1.50 per unit? Y / x = a < = > (x - 900) / x = a. (x - 900) / x = a < = > x - 900 = ax < = > x - ax = 900 < = > x (1 - a) = 900 < = > x = 900 / (1 - a) (5.50x -
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Unformatted text preview: (900 + 4.50x)) / x = .25 (5.50x - (900 + 4.50x)) = .25x -900 - 4.50x =.25x - 5.50x -900 = .25x - 5.50x + 4.50x 900 =.75x x = 900 / (1 - 0.25) x = 900 / 0.75 = 1200 (you must sell 1200 units at \$0.25 profit per unit) x = 900 / (1 - 0.5) x = 900 / 0.50 = 1800 (you must sell 1800 units at \$0.50 per unit) x = 900 / (1 - 1.5) x = 900 / 0.75 = -1800 (this means that we can't average a profit of of \$1.50 per unit). Reference: http://www.dinkytown.net/java/BreakEven.html...
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## This note was uploaded on 08/24/2011 for the course MGMT 375 taught by Professor Martinbrennan during the Summer '10 term at Park.

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