Suppose that your computers were not working and you had to solve the following problem for management by creating and explaining a data table.
For each five thousand units of output (from 30 to 90) average variable cost is AVC = 540/Q + 60 + 1.2 Q. Suppose fixed costs are $ 2500.
a) Calculate total costs for annual output from 30 to 90 (in 5 unit increments) and total revenue if demand is Pd = 240 – 1/3 Qd. Prepare a table with the appropriate headings, and values to determine where the optimal quantity is.
b) A manager challenges your findings and asks that you “prove” that this is correct. What do you do to prove that this is correct? Explain how you prove that this is correct.