Abstract corporation uses demand explicitly in its

Reference no: EM13597283

Abstract Corporation uses demand explicitly in its cost-volume-profit model. It has determined that the demand it faces is given by the equationP = (750 - .0175Q) where P = price, and Q = quantity in units.Its variable costs are constant at $178 per unit, and its fixed costs are $395,000.

REQUIRED:

a. Determine the output level at which its pretax profits are at a maximum.

b. If the tax rate is 45%, determine the output level at which after-tax profits are at a maximum.

Reference no: EM13597283

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