If the month-to-month call for or quantity is V, then the sales is given as P*V in which P is the supplier fee.
The required details for constant value in given paragraph
If FC is the constant value and VC is the variable value according to unit, then the Total Fixed Cost = FC and Total Variable Cost = VC*V. The internet earnings it then ultimately given as Revenue-Total Fixed Cost - Total Variable Cost = P*V-FC-VC*V. For In City, we were for the reason that the FC = $7000. The variable value according to vehicle that is the value of labor, materials, and transportation expenses is $10. The fee is $90. Hence we've got the under at a quantity of 2 hundred motors and three hundred motors respectively
At Volume V = 2 hundred motors
Total Revenue = 90*2 hundred = $18000
Total Fixed Cost = $7000
Total Variable Cost = 10*2 hundred = $2000
Net Profit = 18000-7000-2000 = $9000
At Volume V = three hundred motors
Total Revenue = 90*three hundred = $27000
Total Fixed Cost = $7000
Total Variable Cost = 10*three hundred = $3000
Net Profit = 27000-7000-3000 = $17000
For out of doors location, we were for the reason that the FC = $4800. The variable value according to vehicle that is the value of labor, materials, and transportation expenses is $18. The fee is $90. Hence we've got the under at a quantity of 2 hundred motors and three hundred motors respectively
At Volume V = 2 hundred motors
Total Revenue = 90*2 hundred = $18000
Total Fixed Cost = $4800
Total Variable Cost = 18*2 hundred = $3600
Net Profit = 18000-4800-3600 = $9600
At Volume V = three hundred motors
Total Revenue = 90*three hundred = $27000
Total Fixed Cost = $4800
Total Variable Cost = 18*three hundred = $5400
Net Profit = 27000-4800-5400 = $16800
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(Complete question)
A retired auto mechanic hopes to open his own rust proofing shop. Customers would be area new car dealers. Two locations are being considered, one in the center of the city and one on the outskirts of the city. The in city location would involve fixed monthly costs of $7,000 and labor, materials and transportation costs of $10 per car. The outside location would have fixed monthly costs of $4,800 and labor, materials, and transportation costs of $18 per car. Dealer price at either location will be $90 per car. a. Which location will yield the greatest profit if monthly demand is (1) 200 cars? (2) 300 cars? b. At what volume of output will the two sites yield the same monthly profit?