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Question
If fixed cost of a product is 90,000 and unit variable cost Rs. 25 and selling price Rs. 55. Find the level of production to earn a profit of Rs. 30,000___.
If fixed cost of a product is 90,000 and unit variable cost Rs. 25 and selling price Rs. 55. Find the level of production to earn a profit of Rs. 30,000___.
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Solution
The correct option is C (4000)
Total
profit under perfect competition is calculated after deducting the total cost
incurred in the production of the output by the total revenue earned from the
sale of such output.
Total profit = Total revenue - total cost
Let the level of production be x.
Total revenue = Rs. 55x
Total cost = Rs. ( 90,000+25x )
Total profit = Rs. 30,000
=> Total revenue - total cost = Rs. 30,000
=> Rs. (55x - 90,000 - 25x) = Rs. 30,000
=> 30x = 1,20,000
=> x = 4000
Therefore, the total level of production for earning Rs. 30,000 profit is 4000 units.
Total profit under perfect competition is calculated after deducting the total cost incurred in the production of the output by the total revenue earned from the sale of such output.
Total profit = Total revenue - total cost
Let the level of production be x.
Total revenue = Rs. 55x
Total cost = Rs. ( 90,000+25x )
Total profit = Rs. 30,000
=> Total revenue - total cost = Rs. 30,000
=> Rs. (55x - 90,000 - 25x) = Rs. 30,000
=> 30x = 1,20,000
=> x = 4000
Therefore, the total level of production for earning Rs. 30,000 profit is 4000 units.
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