Management believes it can sell a new product for $8.50. The fixed costs of production are estimated to be $6,000, and the variable costs are $3.20 a unit. Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs. Quantity Total Revenue Variable Costs Fixed Costs Total Costs Profits (Loss) 0 500 1,000 1,500 2,000 2,500 3,000 2. Determine the break-even level using the above table and use the following Equation to confirm the break-even level of output. PQB = FC + VQB PQB - VQB = FC QB (P-V) = FC QB = FC P-V
(Please answer question 2)
Management believes it can sell a new product for $8.50. The fixed costs of production are estimated to be $6,000, and the variable costs are $3.20 a unit.
- Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs.
|
Quantity |
Total Revenue |
Variable Costs |
Fixed Costs |
Total Costs |
|
|
0 |
|
|
|
|
|
|
500 |
|
|
|
|
|
|
1,000 |
|
|
|
|
|
|
1,500 |
|
|
|
|
|
|
2,000 |
|
|
|
|
|
|
2,500 |
|
|
|
|
|
|
3,000 |
|
|
|
|
|
2. Determine the break-even level using the above table and use the following Equation to confirm the break-even level of output.
PQB = FC + VQB
PQB - VQB = FC
QB (P-V) = FC
QB = FC
P-V
3. What would happen to the total revenue schedule, the total cost schedule, and the break-even level of output if management determined that fixed costs would be $10,000 instead of $6,000?
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