Determine the old and new profits at 100% capacity. Determine the old and new breakeven points.

EBK HEALTH ECONOMICS AND POLICY
7th Edition
ISBN:9781337668279
Author:Henderson
Publisher:Henderson
Chapter4: Economic Evaluation In Health Care
Section: Chapter Questions
Problem 7QAP
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A firm has production capacity of 500 refrigerators per month and its fixed costs are P2,750,000 a month.  The variable cost per unit is P11,500 and each unit can be sold for P20,000.  Economic measures are instituted to reduce the fixed costs by 10% and the variable costs by 15%.

  1. Determine the old and new profits at 100% capacity.
  2. Determine the old and new breakeven points.

           

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