Khaled has developed a new technology device that is so exciting he is considering quitting his job in order to produce and market it on a large scale basis. Khaled will rent a small factory for 2,000dhs per month for production purposes. Utilities will cost 500dhs per month. Khaled has already taken an industrial design course at Dubal Men's College to help prepare for this venture. The course cost 800dhs. Khaled will rent production equipment at a monthly cost of 4,000dhs. He estimates the material cost per unit will be 20dhs, and the labor cost will be 10dhs per unit. He will hire workers and spend his time promoting the product. To do this he will quit his job which pays 20,000dhs per month. Advertising and promotion will cost 3,500dhs per month. Required: 1- 2. Calculate the total Fixed cost 3- Calculate the total variable cost per unit 30 4- If the machine max production capacity is 100o units per month, what is the selling price he should set to break even monthly 5- If Khaled to earn a profit equal to his current salary, for how much he should sell the unit 6- What is the fixed cost per unit for maximum production

Khaled has developed a new technology device that is so exciting he is considering quitting his job in order to produce and market it on a large scale basis. Khaled will rent a small factory for 2,000dhs per month for production purposes. Utilities will cost 500dhs per month. Khaled has already taken an industrial design course at Dubal Men's College to help prepare for this venture. The course cost 800dhs. Khaled will rent production equipment at a monthly cost of 4,000dhs. He estimates the material cost per unit will be 20dhs, and the labor cost will be 10dhs per unit. He will hire workers and spend his time promoting the product. To do this he will quit his job which pays 20,000dhs per month. Advertising and promotion will cost 3,500dhs per month. Required: 1- 2. Calculate the total Fixed cost 3- Calculate the total variable cost per unit 30 4- If the machine max production capacity is 100o units per month, what is the selling price he should set to break even monthly 5- If Khaled to earn a profit equal to his current salary, for how much he should sell the unit 6- What is the fixed cost per unit for maximum production

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 5E

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