Question

aste * ipboard A A Styles A-ay. A Aa Font Editing - A Paragraph Styles G 1. Fred Franklin, a recent graduate in Operations and supply chain management, has just started a consulting firm. He is considering building some low-cost office units but wants to determine if an anticipated volume of 9,000 units will provide an adequate profit at the target purchase price of $10 per unit. To embark on the project, Mr. Franklin will incur a fixed cost of $30,000 and variable cost of $6.00 per unit. a. What profit would Mr. Franklin make to facilitate the project? (20points) Union 6. How many office units will Mr. Franklin build to break-even? (10 points) 11 WORDS DE VO house delice home 19 0 backspace

Answer 1

a.

Profit = TR - TC

TC = FC + VC = 30000 + 9000 * 6 = 84000

TR = P* Q = 9000 * 10 = 90000

Profit = 90000 - 84000 = 6000

b.

Let breakeven volume be X, then at breakeven

TC = TR

10 * X = 30000 + 6 * X

4 * X = 30000

X = 7500