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In it firt year, "Abol Buna Company" had the following experience
Sale = 25,000 unit Selling price = Birr 100
TVC = Birr 1,500,000 TFC = Birr 350,000
Required:
Develop revenue, cot and profit function for the company in term of quantity. Find the Breakeven point in term of quantity
Convert the cot equation in term of quantity into a cot equation in term of revenue
Find the Breakeven revenue
If profit had been Birr 500,000 what would have been the ale volume (revenue) and the quantity of ale. What would be the profit if ale were Birr 2,000,000?

Respuesta :

  1. The cost and the revenue are equal, so the breakeven point in terms of quantity is 25,000 units.
  2. The cost and the revenue are equal, so the breakeven revenue is 1,850,000 Birr.
  3. The ale volume will be 2,350,000 Birr and 23,500 units in the quantity.
  4. The profil will be 150,000 Birr if sale were Birr 2,000,000.

To develop the revenue function, we can use the information provided about the sale and the selling price. The revenue can be calculated as the product of the sale and the selling price.

In this case, the revenue function would be:

Revenue = Sale * Selling Price

= 25,000 * 100 Birr/unit

= 2,500,000 Birr

To develop the cost function, we can use the information provided about the total variable cost (TVC) and the total fixed cost (TFC). The cost function would be:

Cost = TVC + TFC

= 1,500,000 Birr + 350,000 Birr

= 1,850,000 Birr

To find the profit, we can subtract the cost from the revenue. The profit function would be:

Profit = Revenue - Cost

= 2,500,000 Birr - 1,850,000 Birr

= 650,000 Birr

To find the breakeven point in terms of quantity, we need to find the point at which the cost and the revenue are equal. This can be done by setting the profit function equal to zero and solving for the quantity.

Profit = 0 = Revenue - Cost

= 2,500,000 Birr - 1,850,000 Birr

= 650,000 Birr

At this point, the cost and the revenue are equal, so the breakeven point in terms of quantity is 25,000 units.

To convert the cost equation in terms of quantity into a cost equation in terms of revenue, we can use the revenue function to express the quantity in terms of revenue. The cost function would then be:

Cost = TVC + TFC

= 1,500,000 Birr + 350,000 Birr

= 1,850,000 Birr

To find the breakeven revenue, we can set the profit function equal to zero and solve for the revenue.

Profit = 0 = Revenue - Cost

= Revenue - (TVC + TFC)

= Revenue - 1,850,000 Birr

At this point, the cost and the revenue are equal, so the breakeven revenue is 1,850,000 Birr.

If the profit had been 500,000 Birr, we can use the profit function to solve for the sale and the revenue.

Profit = 500,000 Birr = Revenue - Cost

= Revenue - (TVC + TFC)

= Revenue - 1,850,000 Birr

Solving for the revenue, we get:

Revenue = Profit + Cost

= 500,000 Birr + 1,850,000 Birr

= 2,350,000 Birr

Then, using the revenue function to solve for the sale, we get:

Revenue = Sale * Selling Price

= 2,350,000 Birr / 100 Birr/unit

= 23,500 units

If the revenue had been 2,000,000 Birr, we can use the revenue function to solve for the sale and then use the profit function to solve for the profit.

Sale = Revenue / Selling Price

= 2,000,000 Birr / 100 Birr/unit

= 20,000 units

Profit = Revenue - Cost

= 2,000,000 Birr - (TVC + TFC)

= 2,000,000 Birr - 1,850,000 Birr

= 150,000 Birr

Learn more about revenue function, here https://brainly.com/question/29148322

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