Question

       Q4. A group of engineers is interested in forming a company to produce smoke detectors. They have developed a  

              design and estimate that variable costs per unit, including materials, labor and marketing costs are $24.5. Fixed 

              costs associated with the formation, operation and management of the company and the purchase of equipment 

             and machinery total $275,000.they estimate that the selling price will be $40 per detector.         


a) Determined the number of smoke detector which must be sold in order for the firm to break even on the venture.

b) Preliminary marketing data indicate that the firm can expect to sell approximately 25,000 smoke detectors over the life of the project if the detectors are sold for $40 per unit. Determine expected profit at this level of output.

​

Answer 1

Given : variable costs per unit = $24.5

Fixed  costs  = $275,000

selling price will be $40 per detector.

firm  expect to sell approximately 25,000 smoke detectors

To Find : umber of smoke detector which must be sold in order for the firm to break even on the venture.

Determine expected profit at 25,000 level of output.

Solution:

Let say N units for break even points

variable costs per unit = $24.5

variable costs for N units = $24.5N

Fixed  costs  = $275,000

Total Cost = 24.5N + 275,000  $

selling price per detector =  $40

selling price for N detectors =  $ 40N

breakeven point

40N = 24.5N + 275,000

=> 15.5N = 275,000

=> N  = 17,741.9

Hence 17742 units  for break even point

25,000  detectors sold

Expected profit = 25000 * 40  - ( 24.5( 25000) + 275,000)

= 1000000 - 612500 - 275000

= 1,12,500

expected profit  = 1,12,500 $

Learn More:

The revenue function for a product is r =600q 0.5q2 and the cost ...

brainly.in/question/10321657

Q. By considering the Particulous as mentioned:-fixed cost-1.5 Lakh ...

brainly.in/question/13282320