Question One Native Herbal Solutions Limited manufactures a unique herbal drink using indigenous fruits and plants. The company sells the drink in the local market and also exports it to regional countries. The companys fixed costs are US$800,000 and the variable costs are US$4.00 per bottle and each bottle is sold for US$9.00. You have been hired to assist in making an analysis of the costs and revenues of the company to ascertain the level at which the company will be loss making or earning profit. With reference to the scenario above:

a) Find the total cost function or equation of manufacturing the herbal drinks. (3 marks)

b) Find the total revenue function or equation for selling the herbal drinks (3 marks)

c) Using your answers to questions a) and b), calculate the breakeven point in terms of herbal drink bottles manufactured. (3 marks)

d) Draw a graph showing total cost and total revenue clearly labeled. (4 marks) e) Show the profit and loss making regions of your graph (3 marks)

f) How much revenue would Native Herbal Solutions make if it sells 250,000 bottles? (3 marks) g) Calculate the profit/loss that Native Herbal Solutions will make from producing and selling 250,000 bottles of its drink. (3 marks)

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