Q1.

For the following data compute (a) Total fixed cost (b) the Average variable cost (c) the break-even price of the washing machine:

• CEO Salary: $80,000 per year
• Rent: $ 25,000 per year
• Hourly wages: $ 11/machine
• Component costs: $ 262/machine
• Interest cost: $ 11,000 per year
• Cost of Manufacturing plant and equipment for the project (expected to last 7 years) $ 70,000

Production: 12,000 washing machines per year

Now for the second part of the question:

Consider the data of Question 1 Ignore the production data; now if the selling price of a washing machine were $ 400, then what would the break-even level of quantity demand for washing machines be.

Now for part three:

Consider the data of Question 1- Ignore the production data. Now if the firm wanted to make a profit of $ 3000 in a year then what should the level of production be?