A firm has the capacity to produce 1,131,020 units of a product each year. At present, it is operating at 36 percent of capacity. The firm’s annual revenue is $871,726.
A firm has the capacity to produce 1,131,020 units of a product each
year. At present, it is operating at 36 percent of capacity. The firm’s annual revenue is $871,726. Annual fixed costs are $163,161 and the variable costs are $.49 cents per unit. The following equations will be useful.
Profit = Revenue – Costs
Revenue = Price each * quantity
Costs = Fixed Cost + Variable Costs
Variable Cost = Variable Cost per unit * number of units
At the break even point, Profit = 0
What is the firm’s annual profit or loss?
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