could you plz answer both quastions SportXpert company manufactures sport bikes.
ID: 3173952 • Letter: C
Question
could you plz answer both quastions
SportXpert company manufactures sport bikes. It assesses its manufactures fixed costs at 81,000 SAR for a year. Each mountain bike carries on average a variable cost of 300 SAR. SportXpertsells every bike at a price of 1, 200 SAR. Determine the number of bikes that the company must sell to reach its break-even point Assuming that the company manufactures 180 sport bikes per year (regular activity over the year). What will be its benefit? Consider the following payoff (profit) table Which action would an optimistic(maximax) decision maker choose? Which action would a pessimistic(maximin) decision maker choose?Explanation / Answer
The break-even point refers to the revenues needed to cover a company's total amount of fixed and variable expenses during a specified period of time.
total fixed costs of year = 81000 SAR
total variable costs of year = 300n SAR
Where n= number of mountain bikes sold in a year
Total cost = 81000 + 300n
total revenue = 1200n
At break even point, 1200n = 81000 + 300n
900n = 81000
n=90.
Hence company should sell 90 mountain bkes each year to reach break even point
b)
Given n=180
total profit = total revenue - total cost
= 1200n -(81000+300n)
=900n-81000
=900(180) - 81000 = 81000 SAR
2)
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