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Help please?!? Question 10 (Challenging). Cerberus, a company that specialises in producing datapads, has the following costs: . Lease - $20,000 . Machinery - $90,000

Help please?!?

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Question 10 (Challenging). Cerberus, a company that specialises in producing datapads, has the following costs: . Lease - $20,000 . Machinery - $90,000 . Materials - $5,000 per datapad . Labour and overhead have the following schedule per day Item per $000 f0]: Q 0 1 2 3 4 5 6 7 8 9 10 Labour 0 30 40 50 52 62 72 82 97 112 127 Overhead 1o 25 3o 35 3.8 48 64 88 113 153 233 a) One of your colleagues argues that both the machinery and lease are both sunk costs. Discuss whether this is true. b) Which of the costs above are fixed and which are variable? c) Complete the following table (to one decimal place): Quantity (dozens) Total Cost Fixed Cost Variable Cost Marginal Cost Average Total Cost Average Variable Cost \\coouoxmhwneo H 0 d) Plot the marginal cost curve, average total cost curve and average variable cost curve. Calculate the maximum profit possible (by operating) if the sale price is $40,000. e) Assuming all fixed costs are not recoverable will the firm operate in the short run? Will the firm operate in the long run? (discuss this in terms of a minimum price in the market) f) If the firm can sell their machinery \"at cost\" at the start of the period but it will otherwise be unrecoverable. How does this change their profit? What about operation in the short run? What about operation in the long run? g) On a new graph plot the marginal cost curve, average total cost curve and average variable cost curve. Calculate the maximum profit possible if the sale price is $40,000. h) Assuming all fixed costs are not recoverable will the firm operate in the short run? Will the firm operate in the long run? (discuss this in terms of a minimum price in the market) i) Consider that Cerberus will operate in the long run, what can you say about the minimum level of production (quantity) between using the original case and after the new technology is implemented. What has caused this

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