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17 November, 12:58

The Rejuvo Corp. manufactures granite countertop cleaner and polish. Quarterly sales Q is a random variable with a mean of 25,000 bottles and a standard deviation of 2,000 bottles. Variable cost is $8 per unit and fixed cost is $150,000. (a) Find the mean and standard deviation of Rejuvo's total cost. Mean $ Standard deviation $ (b-1) If all bottles are sold, what would the selling price have to be to break even, on average? Selling price $ (b-2) If all bottles are sold, what would the selling price have to be to make a profit of $20,000? (Round your answer to 2 decimal places.) Selling price $

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  1. 17 November, 14:37
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    Mean of total cost = $350,000

    Standard deviation of total cost = $16,000

    Selling price of the bottle on average should be $14

    The selling price of the bottle on average should be $14.8

    Explanation:

    Mean of total cost = ((Mean of bottle * Variable cost per unit) + Fixed cost

    Mean of total cost = 25,000 * $8 per unit + $150,000

    = $200,000 + $150,000

    = $350,000

    Standard deviation of total cost = Standard deviation * Variable cost per unit

    = 2,000 * $8

    = $16,000

    b-1 The break even Total revenue - Total cost = 0

    So, we have given equation

    25,000 * P - $350,000 = 0

    25,000P = $350,000

    P = $350,000 : 25,000

    = $14

    b-2 For making profit of $20,000, the equation

    Total revenue - Total cost = $20,000

    25,000 * P - $350,000 = 20,000

    25,000P = 20,000 + $350,000

    25,000P = $370,000

    P = $370,000 : 25,000

    = $14.8

    The selling price of the bottle on average should be $14.8
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