Step 4
| Number of units | Variable cost per unit | Variable cost | Fixed cost | TC | MC | Selling price | revenue | MR | | TC | TR | Profit |
| 200 | $ 60,000.00 | $ 12,000,000.00 | $ 4,500,000.00 | $ 16,500,000.00 | $ - 0 | $ 70,000.00 | $ 14,000,000.00 | $ - 0 | | $ 16,500,000.00 | $ 14,000,000.00 | $ (2,500,000.00) |
| 250 | $ 54,000.00 | $ 13,500,000.00 | $ 4,500,000.00 | $ 18,000,000.00 | $ 30,000.00 | $ 66,000.00 | $ 16,500,000.00 | $ 50,000.00 | | $ 18,000,000.00 | $ 16,500,000.00 | $ (1,500,000.00) |
| 300 | $ 48,000.00 | $ 14,400,000.00 | $ 4,500,000.00 | $ 18,900,000.00 | $ 18,000.00 | $ 64,000.00 | $ 19,200,000.00 | $ 54,000.00 | | $ 18,900,000.00 | $ 19,200,000.00 | $ 300,000.00 |
| 350 | $ 46,000.00 | $ 16,100,000.00 | $ 4,500,000.00 | $ 20,600,000.00 | $ 34,000.00 | $ 59,000.00 | $ 20,650,000.00 | $ 29,000.00 | | $ 20,600,000.00 | $ 20,650,000.00 | $ 50,000.00 |
| 400 | $ 45,000.00 | $ 18,000,000.00 | $ 4,500,000.00 | $ 22,500,000.00 | $ 38,000.00 | $ 52,000.00 | $ 20,800,000.00 | $ 3,000.00 | | $ 22,500,000.00 | $ 20,800,000.00 | $ (1,700,000.00) |
| Number of units | MC | MR |
| 200 | $ - 0 | $ - 0 |
| 250 | $ 30,000.00 | $ 50,000.00 |
| 300 | $ 18,000.00 | $ 54,000.00 |
| 350 | $ 34,000.00 | $ 29,000.00 |
| 400 | $ 38,000.00 | $ 3,000.00 |
| Normally the profit maximising output level is that whose marginal cost (MC) equals the (MR); in our case the out put level that brings us closer to that is 350units at a selling price of $59,000,however further analysis |
| has shown us that at this level the profit will be $50,000 |
| Recommendation |
| For optimum results that are effective and efficient the company should consider producing at 300 units at a selling price of $64,000 and the profit will be $300,000 |
MC 200 250 300 350 400 0 30000 18000 34000 38000 MR 200 250 300 350 400 0 50000 54000 29000 3000
iikotu
step4.xlsx
