Question
Two friends are considering launching their own car company. They have drafted a budget for the period January-December 2017. Rent expenses are estimated at 9.200,
Two friends are considering launching their own car company. They have drafted a budget for the period January-December 2017. Rent expenses are estimated at 9.200, depreciation of equipment is estimated at 7.000, salaries are estimated at 16.400 and cost of engine oil is estimated at 2 per litre. According to the budget, each car will use at average 5 litres of engine oil with each vehicle inspection and each oil filter costs 3 per a car. Franchise fee is 1,1 for each oil change. The budget estimates the following electricity expenses in connection to the number of oil changes.
Number of oil changes | Electricity expenses |
4.000 | 6.000 |
6.000 | 7.300 |
9.000 | 9.600 |
12.000 | 12.600 |
14.000 | 15.000 |
The two friends are going to sell their service at a cost of 25 per a car where the oil filter is included in the price.
1) Find the cost function for the electricity usage according to the high-low method.
2) Calculate the cost-volume-profit according to the budget, where revenues and expenses come together both in quantity and values.
3) How much do the two friends need to sell to profit 20.000?
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