Reference no: EM133199357 , Length: Word count: 3 Pages
Assignment Task 1: The Caloi Biking Company manufactures a line of different bicycles in Brazil and export them all over Latin America. According to their website
"...Caloi continues to own the bicycle market in Brazil and maintains its status as one of the largest bicycle brands in Latin America. Caloi is always looking to expand through continued development of its full range of products, as well as strengthening and adding to its elite mountain team. Caloi makes riding accessible for all through its large portfolio of products, from high-performance Mountain, Urban, Recreational and Road bikes to children's models, all of which are distributed through a variety of channels ranging from mass market retailers to independent bike shops.."
In the production process, fixed costs are $60. Fill in the table below for total cost, average variable cost, average total cost, and marginal cost.
| Quantity |
Variable Cost |
Fixed Cost |
Total Cost |
Average Variable Cost |
Average Total Cost |
Marginal Cost |
| 0 |
0 |
$60 |
|
|
|
|
| 1 |
$20 |
$60 |
|
|
|
|
| 2 |
$50 |
$60 |
|
|
|
|
| 3 |
$90 |
$60 |
|
|
|
|
| 4 |
$140 |
$60 |
|
|
|
|
| 5 |
$200 |
$60 |
|
|
|
|
| 6 |
$270 |
$60 |
|
|
|
|
Assignment Task 2: Consider now that Caloi Bikes produces a quantity of 5 units that it sells for a price of $125 each.
A. What will be the company's profits or losses?
B. How can you tell at a glance whether the company is making or losing money at this price by looking at average cost?
C. At the given quantity and price, is the marginal unit produced adding to profits?
Assignment Task 3: As discussed, the Bullford Towers is a 20-story office building in downtown Charlotte. The new company hired to provide the cleaning serviceis being praised for their excellent job. The building administration, however, need to evaluate the cost of their services to forecast the budget for the next year. Based on the table shown below, which relates number of offices cleaned to service costs, please answer the following questions:
| Offices cleaned/evening |
0 |
6 |
14 |
24 |
32 |
34 |
| Total cost |
$150 |
$300 |
$450 |
$600 |
$750 |
$900 |
A. What is the average fixed cost of cleaning three classrooms?
B. What is the average variable cost of cleaning three classrooms?
C. What is the average fixed cost of cleaning seven classrooms?
D. What is the average variable cost of cleaning seven classrooms?
E. What is the marginal cost of cleaning the seventeenth classroom?
F. What is the average total cost of cleaning twelve classrooms?