MSCI 2200 Chapter Notes - Chapter 1: Fixed Cost, Variable Cost, Bombardier Dash 8
13 Jan 2017
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Cost and volume models: c(x) = 3000 + 2x. C(x): total cost of producing x units. Revenue and volume models: r(x) = 5x. R(x): total revenue associated with selling x units. X: sales volume in units: p(x) = r(x) c(x) = 5x (3000 + 2x) = 3x 3000, 0 = 3x 3000, 3x = 3000, x = 1000. Selling price of the house is ,000. Land for each house costs ,000 and lumber, supplies, and other materials run another ,000 per house. The cost of supplies, utilities, and leased equipment runs another /month. The one salesperson is paid a commission of on the sale of each house. Fixed costs = 2,000 + 3,000 + all salaries = ,000. Identify all costs and denote the marginal cost and marginal revenue for each house. Write the monthly cost function c(x), revenue function r(x), and profit function p(x) If they go ahead with this product, a fixed cost of ,000 is incurred.
