4. A retail co. plans to work on a margin of 44% of retail price & to incur other Variable Cost of 4%. If is expected Fixed cost of Br. 20,000. i. Find the equation relating Total Cost to sales ii. Find the profit if sales are Br. 60,000 iii. Find the breakeven revenue iv. If profit is Br. 15,000 what should be the revenue level? v. If you have any one item at a price of Br. 15/unit how do you convert the cost equation in terms of revenue in to a cost equation in terms of quantity?
Answers
Answer:
Gxid85xtdtdc8yciy ycctsxi. Ydod8d8xiy
Step-by-step explanation:
Dydyd8td8yxtd5e hcoyfiyei5d yx
Concept
The use of mathematical techniques to solve financial issues is known as financial mathematics. It uses techniques from economic theory, stochastic processes, statistics, and probability.
Given
margin on which retail company works = 44%
variable cost = 4%
fixed cost = Br. 20,000
Find
we need to find:
- the equation relating total cost to sales.
- the profit if sales are Br . 60,000
- the break-even revenue
- if profit is Br. 15,000 then what will be its revenue level
- how to convert the cost of equation in terms of revenue
Solution
(i) given fixed cost = Br. 20,000
VC = 0.4 ₊ 0.56
Y = 0.6x ₊ 20,000
the above formed is the equation relating total cost to sales.
(ii) Π = TR ₋ TC
= 60,000 ₋ (0.6×60000₊20000)
= 60,000 ₋ (36000₊20000)
= 60,000 ₋ 56000
= 4000 birr
(iii) breakeven revenue:
BER or Xe = FC/1₋m = 20000/1₋0.6
= 20000/0.4
=50,000
(iv) Qin sale = FC ₊ π/1₋M
= 20000₊15000/1₋0.6
= 35000/0.4
= 87,500
(V) The cost equation is:
y = bx
87500 = 15x
x = 87500/15
x = 5833.33
Hence we determined the following requirements.
#SPJ2