Sign In
Not register? Register Now!
Essay Available:
You are here: HomeMath ProblemMathematics & Economics
Pages:
2 pages/≈550 words
Sources:
Level:
APA
Subject:
Mathematics & Economics
Type:
Math Problem
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 8.64
Topic:

Break Even and Shut Down Analysis (Math Problem Sample)

Instructions:

Task: Conduct Break even and shut down analysis (Costs, Revenues, and Workers productivity)

source..
Content:

Break Even and Shut Down Analysis
Name:
Institutional Affiliations:
Date:
A firm currently uses 50,000 workers to produce 200,000 units of output per day. The daily wage per worker is $80, and the price of the firm’s output is $25. The cost of other variable inputs is $400,000 per day.  Assume that total fixed cost equals $1,000,000. Calculate the values for the following four formulas: Total Variable Cost = (Number of Workers x Worker’s Daily Wage) + Other Variable Costs
TVC = (50,000 x 80) + 400,000
TVC = $[4,000,000 + 400,000]
TVC = $4,400,000 Average Variable Cost = Total Variable Cost / Units of Output per Day
AVC = TVC/Q
But Q = 200,000
AVC = $(4,400,000/200,000)
AVC = $22.0 Average Total Cost = (Total Variable Cost +Total Fixed Cost) / Units of Output per Day
ATC = (TVC + TFC)/Q
ATC = $(4,400,000 + 1,000,000)/200,000
ATC = $27 Worker Productivity = Units of Output per Day / Number of Workers 
WP = Q/L where Q = 200,000 and L = 50,000
WP = 200,000/50,000
WP = 4
Complete the Following:  Calculate the firm’s profit or loss
Total Revenue – Total Costs = Profit
Profitability = TR-TC
But TR = PxQ while TC = TFC + TVC
TC = $5,400,000; TR = $(200,000x25) = TR = $5,000,000
Profit = $(5,000,000 – 5,400,000) = -$400,000
Hence, Loss = $400,000
Shut-down Analysis
Compare the firm’s output price and the calculated average variable cost and average total cost. Should the firm shut down immediately when the total fixed cost equals $1,000,000?
At TFC = $1,000,000, the firm is running at a loss since TC>TR, representing a loss of $400,000.
The Price, P = $25, Average Variable Costs (AVC) = $22.0
Since P &g...
Get the Whole Paper!
Not exactly what you need?
Do you need a custom essay? Order right now:

Other Topics:

  • Statistics: The Appropriate Null And Alternative Hypothesis
    Description: Identify or specify the appropriate null and alternative hypothesis for (7the following test. Express each in writing and the form of an equation)...
    1 page/≈550 words| No Sources | APA | Mathematics & Economics | Math Problem |
  • About Mathematics Problem Assignment: Seek Out Patterns
    Description: Mathematicians seek out patterns and use them to formulate new conjectures. Mathematicians resolve the truth or falsity of conjectures by mathematical proof....
    1 page/≈550 words| No Sources | APA | Mathematics & Economics | Math Problem |
  • What is the Use of RSA Algorithm Research Assignment
    Description: Computers and internet has called for tight privacy protection as users have their sensitive information stored on networks and on computers...
    12 pages/≈3300 words| 11 Sources | APA | Mathematics & Economics | Math Problem |
Need a Custom Essay Written?
First time 15% Discount!