A large wood product company is negotiating a contract to sell plywood overseas. The fixed cost that can be allocated to the production of plywood is $900,000 per month. The variable cost per thousand board feet is $131.50. The price charged will be determined by 600 – 0.05x, where x is the monthly sales volume.
Please show a clear, complete and step-by-step solutions as well as essential formulas to be considered
- Determine the optimal monthly sales volume for this product and calculate the profit (or loss) at the optimal volume.
- What is domain of profitable demand?
- Find the volume at which breakeven occurs and the range (domain) of profitable demand.
- What range (domain) of profitable demand if the variable cost are reduced to 10%