Please show me how to solve these two questions? thanks. 1- A company has annual
ID: 1192423 • Letter: P
Question
Please show me how to solve these two questions? thanks.
1- A company has annual fixed costs of $2456405 and variable costs of $0.85 per unit produced. If the company charges $2.1 per unit for their product, what is the breakeven annual production quantity? Assume that the demand is unlimited.
2- Truck Alpha initially costs $423 more than Truck Beta, but it consumes 0.04 liter/km versus 0.06 liter/km for Beta. Both trucks last 9 years, and Beta's salvage value is $106 smaller than Alpha's. Fuel costs $1.49 per liter. Other things being equal, beyond how many kilometers of use per year does Alpha become preferable to Beta?
Explanation / Answer
1.
Cost equation = 2456405 + 0.85Q
Revenue function = 2.1Q
2456405+0.85Q = 2.1Q
1.25Q = 2456405
Q= 1965124
2.