In its first year, A Company had the following data.
Sales = 25,000 units Selling price = Birr 100
Total variable cost = Birr 1,500,000 TFC = Birr 350,000
Required:
a) Develop revenues, cost, and profit functions for the company in terms of quantity.
b) The intercept of the revenue equation is zero, what do you think is the reason?
c) Find the break-even point in terms of quantity.
d) Convert the cost equation in terms of quantity in to a cost equation in terms of revenue.
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e) Find the break-even revenue.
f) If profit had been Birr 500,000 what would have been the sales volume (revenue) and
the quantity of sales.
g) What would have been the profit if sales were Birr 2,000,000?