1.Calculate fixed costs (TFC):
2000+1200×3+150×3+12×92=7154
2.Calculate the variables costs per unit of output (AVC):
flake-free ice cream 100g:
105.60=0.56
121.80=0.15
0.56+0.15=0.71
flake ice cream:
frac520=0.25
0.25+0.71=0.96
e)calculate the breakeven point in pieces
BEP=P−AVCTFCBEP=(1.50−0.71)+(2.20−0.96)7154=3524
0.4×3524=1409.6=1410
d) profit:
200×92=18400
0.4×18400=7360 flake ice cream
18400-7360=11040 flake-free ice cream
(11040×1.50+7360×2.20)−(11040×0.71+7360×0.96)−7154=(16560+16192)−(7838.4+7065.6)−7154=32752−14904−7154=10694
10694-4000=6694
profit is more than income from employment,
so can do business
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