Q1.

(a) 250
(1)Return full gas tank
Cost = tank 250 x 8.5 x 0.97 100
Cost = $20.6125
(2) Return without filling. Cost 250 X 8.5 x 1.15 it. Cost $24.4375
(3) Accept fixed price of Cost = $40
Cost in case of return full gas tank is lowest So it would return it wilth Ja full gos tank.

(b) 400 Km
(1) Return with full -gas_ Cost tank 400 x 8.5 x 0.97 100 Cost $32.98
(2) Return Cost without filling 400 X8-5 x 1.15 100 Cost = $39.
(3) Accept fixed price of $40 Cost = $40 " Cost in case of return with full gas tank" is return full gas
lowest . This is wall

(c) 800 km
(a)Return with full gos tank Cost = 800 x8.5\100 x 0.9
Cost = $66.96
(2) Return Cost = without filling
Cost= 800 X 8.5 \100 x 1.15 Cost= $78.2
(3) Accept fixed price of $40
Cost =$40
• Cost in case of accepting fixed price is lowest So I wall choose to accept fixed price.

(d) Additional cost of stopping $30 x 15\60=7.5$

(1) Cost of returning full tank when travel

(2) Cost is still lower than all other alternatives So answer will not change in part (1)

cost of returning full tank when travel

I'm part (C) were already choosing to return the full tank . So answer will not change in bart (c)
Q2.

Area A :

Gravel pit capacity = 16 million cubic meters

Board restriction to fill inert material is to lower bottom area fill = 2 million cubic
meters

Cost of inert material placed in Area A = $9.40/m 3

Preparation cost = 2 x 106 x $9.40 = $18,800,000

Area B:

Gravel pit capacity = 14 million cubic meters

Difference in the haul

0.20 x 0 = 0

0.60 x 8.04 = 4.82

0.20 x -3.21 = -0.64

Total haul = 4.18 (which is an average additional haul)

Cost of additional haul = (4.18/25) * $140

= 23.40$

Since Truck capacity is 20 m3, additional cost per cubic yard = 23.49/20 m3 = $1.17
per m3

So, for 14 million m3, Total cost = 14 x 106 x $1.17 = $16,380,000

Area B has lower cost than Area A. Hence Area B is preferred.

Total cost (TC) ($) = Fixed cost + Variable (labor) cost

= 2,000,000 + 9,109,000 = 11,109,000

Unit manufacturing cost = TC / Units sold = $11,101,000 / 23,000 = $482.65

(b) When second shift is added,

TC ($) = 2,400,000 + (9,109,000 x 1.25) = 2,400,000 + 11,376,250 = 13,785,250

Unit manufacturing cost = TC / Units sold = $13,785,250 / 46,000 = $299.96

So, unit manufacturing cost will decrease

Q4.

(a) There are two points (0, 0) and (1000, 20) lying on the total revenue curve

The total revenue equation is y = (20 - 0)x/(1000 - 0), that is y = 0.02x

(b) There are two points (0, 10) and (1000, 20) lying on the total cost curve

The total cost equation is y - 10 = (20 - 10)(x - 0)/(1000 - 0), that is y = 0.01x + 10

(c) The breakeven level of x is x = 1000

(d) Since 1500 > 1000, if we sell 1500 units, we will have a profit

(e) Marginal cost is MC = 0.01 (* 10^4) dollars

Average cost is AC = 0.01 + 10/x = 0.01 + 10/1500 = 0.017 (* 10^4) dollars

Q6.
1. Now: PV = - Rs 100,000
2. Year 1: PV = Rs 25,000 / 1.08 = Rs 23,148.15
3. Year 2: PV = Rs 45,000 / 1.082 = Rs 38,580.25 Year 3: PV = Rs 65,000 / 1.083
= Rs 51,599.10
4. Adding those up gets:
5. NPV = - Rs 100,000 + Rs 23,148.15+ Rs 38,580.25+ Rs 51,599.10= Rs
13,327.49
Q7.