Online Quiz 1 Final

1. A producer of potato chips has received a forecast demand of 50000 units for the coming
month from its marketing department. Fixed costs are Tk 200000 per month and variable costs
to make each packet of chips is Tk 5.
a. Find the break-even quantity if each packet of chips sells for Tk 12
b. At what price must the product be sold to obtain a monthly profit of Tk. 1000000?
2. A small firm intends to increase its production capacity by adding a new machine. Two
alternatives, A and B, have been identified, and the associated costs and revenues have been
estimated. Annual fixed costs would be Tk 40000 for A and Tk 30000 for B; variable costs per
unit would be Tk 10 for A and Tk 11 for B, and revenue per unit sold is Tk 15
a. Determine the break even points for both the alternatives.
b. At what volume would both the alternatives yield the same profit?
c. If expected demand is 15000 units, which alternative would yield the higher profit?