How do you convert the cost equation

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Reference no: EM133044255

Question 1. A small home business set up with an investment of $ 10,000 for equipment. The business manufactures a product at a cost of br. 0.64 per unit. If the product sales for Br. 1.20 per unit how many units must be sold before the business breaks even?

Question 2. A retail co. plans to work on a margin of 54% of retail price & to incur other Variable Cost of 4%. If is expected fixed cost of Br. 40,000.
i. Find the equation relating Total Cost to sales
ii. Find the profit if sales are Br. 80,000
iii. Find the breakeven revenue
iv. If profit is Br. 20,000 what should be the revenue level?
v. If you have any one item at a price of Br. 20/unit how do you convert the cost equation in terms of revenue in to a cost equation in terms of quantity?

1/The cost function equation is expressed as C(x)= FC + V(x), where C equals total production cost, FC is total fixed costs, V is variable cost and x is the number of units. Understanding a firm's cost function is helpful in the budgeting process because it helps management understand the cost behaviour of a product.

Reference no: EM133044255

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