Precision Engineering department has collected data on its average costs of production for the past 12 months. The monthly fixed cost is $4000 per month. The AVC and associated output data are presented below:
|
Month
|
Q
|
AVC $
|
|
Jan
|
70
|
375
|
|
Feb
|
58
|
540
|
|
Mar
|
160
|
450
|
|
Apr
|
120
|
255
|
|
May
|
130
|
138
|
|
Jun
|
120
|
150
|
|
Jul
|
10
|
450
|
|
Aug
|
35
|
350
|
|
Sep
|
80
|
60
|
|
Oct
|
110
|
70
|
|
Nov
|
100
|
90
|
|
Dec
|
190
|
153
|
Show what is the optimal level of monthly production for Precision Engineering department if the market price of each component is $400 per piece? What is the maximum profit or minimum loss Precision Engineering department can expect to earn?
Additional Information
This question is based on the Statistics and explains about calculating the maximum profit and the minimum loss for Precision Engineering department can earn if the market price of each of its components is $400.