Managerial ECO week 5 quiz

 

Bags

Fixed Cost

Variable Cost

Total Cost

0

$1,700

$ -

$1,700

100

$1,700

$500

$2,200

200

$1,700

$1,200

$2,900

300

$1,700

$2,700

$4,400

400

$1,700

$5,200

$6,900

500

$1,700

$9,000

$10,700

600

$1,700

$15,000

$16,700

700

$1,700

$23,800

$25,500

800

$1,700

$36,800

$38,500

900

$1,700

$55,800

$57,500

1,000

$1,700

$83,000

$84,700

Given the above information on cost, if you charge $15 per entry, what is the breakeven quantity of bags that you should order?  Orders must be placed in blocks of 100 bags.

Please select any/all viable approaches below: 

Use the profit maximizing rule, MR ≥ MC, buy 300 bags.

Use the profit maximizing rule, MR ≥ MC, buy 200 bags.

Use Qb = F/(MR-AVC) where Qb is the breakeven quantity to be determined, the optimal quantity of bags is 300.

Use Qb = F/(MR-AVC) where Qb is the breakeven quantity to be determined, the optimal quantity of bags is 200.

Problem Set attached