A company is planning to expand its production from its current price (1050 PKR/unit) and getting a total revenue of 37800/PKR at a fixed cost of 1000/- PKR and variable cost of 1050/- PKR. If currently the company is producing 36 units, how many further units can the company make while staying in profit if the appreciation in variable cost (2.13) and depression in price (2.13) per unit from the previous unit

The company can only produce up to 18 units while staying in profit considering the appreciation in variable cost and the depression in price.

The company is planning to expand its production and get a total revenue of 37800/PKR at a fixed cost of 1000/- PKR and a variable cost of 1050/- PKR.

Currently, the company is producing 36 units, and the current price per unit is 1050 PKR/unit.

The total revenue for the current production will be 36 units × 1050 PKR/unit = 37800 PKR.

Since the total revenue is equal to the sum of fixed cost and variable cost, it implies that;

Total Revenue = Fixed Cost + Variable Cost

Multiplying both sides by the number of units gives;

Total Revenue × Number of Units = Fixed Cost × Number of Units + Variable Cost × Number of Units

Rearranging gives;

Variable Cost × Number of Units = Total Revenue × Number of Units

Fixed Cost × Number of Units

Substituting with values from the problem statement, we have;

Variable Cost × Number of Units = 37800 × Number of Units - 1000 × Number of Units

Variable Cost × Number of Units = (37800 - 1000) × Number of Units Variable Cost × Number of Units = 36800 × Number of Units

But the variable cost is given as 1050 PKR/unit.

Therefore, we can write;

1050 × Number of Units = 36800 × Number of Units

1050 = 36800

Since the price of production has depreciated by 2.13, the current price per unit is equal to;

1050/2.13 = 493 PKR/unit

For the company to make a profit, the total revenue must be greater than the total cost.

Therefore; Total Revenue > Fixed Cost + Variable Cost

Multiplying both sides by the number of units gives;

Total Revenue × Number of Units > Fixed Cost × Number of Units + Variable Cost × Number of Units

Substituting with values from the problem statement, we have;

37800 × Number of Units > 1000 × Number of Units + 1050 × Number of Units37800 > 2050 × Number

Units Solving for the number of units;

Number of Units < 37800/2050Number of Units < 18.44 units

Therefore, the company can only produce up to 18 units while staying in profit considering the appreciation in variable cost and the depression in price.

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