Managerial ECO week 5 quiz. Bags
Fixed Cost
Variable Cost
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$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.
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