Math 540 Week 1 Homework - Latest 2015

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MATH 540 Week 1 HomeWork - Latest 2015

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Chapter 1

1. The Retread Tire Company recaps tires. The fixed annual cost of the recapping operation is $55,000.The variable cost of recapping a tire is $8.The company charges $21 to recap a tire.

a. For an annual volume of 10,000 tires, determine the total cost, total revenue, and profit.

b. Determine the annual break-even volume for the Retread Tire Company operation.

2. Evergreen Fertilizer Company produces fertilizer. The company’s fixed monthly cost is $30,000, and its variable cost per pound of fertilizer is $0.16. Evergreen sells the fertilizer for $0.40 per pound. Determine the monthly break-even volume for the company.

3. If Evergreen Fertilizer Company in Problem 2 changes the price of its fertilizer from $0.40 per pound to $0.60 per pound, what effect will the change have on the break-even volume?

4. If Evergreen Fertilizer Company increases its advertising expenditures by $14,000 per year, what effect will the increase have on the break-even volume computed in Problem 2?

5. Annie McCoy, a student at Tech, plans to open a hot dog stand inside Tech’s football stadium during home games. There are seven home games scheduled for the upcoming season. She must pay the Tech athletic department a vendor’s fee of $2,500 for the season. Her stand and other equipment will cost her $3,100 for the season. She estimates that each hot dog she sells will cost her $0.35. She has talked to friends at other universities who sell hot dogs at games. Based on their information and the athletic…...

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