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Ali bey has a small manufacturing firm at the Organize Sanayi. One of his customers asks him if he could make a new product,
Ali bey has a small manufacturing firm at the Organize Sanayi. One of his customers asks him if he could make a new product, called zamazingo, for them. Ali bey thinks, he needs to buy an zamazingo machine for production. He could buy the machine from Germany, Expo Co. Expo Co. sells the machine for 10,000. The current exchange rate is 1 = 6,30 TL. The machine uses advanced technology and its variable cost of producing zamazingo is not linear, but it is a function of yearly production. If the yearly production is Q units, then the per unit variable cost is 8-LOG(Q) TL. Note that the variable cost is in TL, but the fixed cost is in 's. The market price of zamazingo is 10 TL. Important Note: The Excel function for Log(X) is also LOG(X). Since LOG(0) is undefined, make sure that in your solution table starting Q value must be at least 1 or more! (6 pt) a) What is the break-even quantity for this new product line, if Ali bey buys the machine from Expo Co.? (4 pt) b) If Ali bey thinks that he could sell only 5000 units next year, what would be the max /TL, exchange rate that the investment is still viable (that is the break-even quantity will be 5000 units)?
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a To calculate the breakeven quantity for the new product line we need to determine the total cost and total revenue for each level of production and then find the production level where the total rev...Get Instant Access to Expert-Tailored Solutions
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