Question

2. Birat tea packaging company was established last year in eastern part of Nepal. From the last years data, it was found that the cost of buying a packaging machine, factory set up and the cost of land and house was Rs. 8,000,000. The cost price of raw tea was Rs. 80 per Kg, cost of packaging material along with a hologram of the company was Rs. 15 per Kg., cost of labor was Rs. 10 per kg and the transportation cost was Rs 20 per Kg. After investing the above mentioned cost, the owner of the company was able to sell his product at Rs. 160 per Kg at the different part of Nepal as well as some part of India such as West Bengal, Sikkim, Bihar and some part of Uttar Pradesh. Find the a. Total cost function. b. Total revenue function. C. Total profit function. you d. If you were the owner of the company, how many units should have to sell in order to reach neither loss nor profit? e. What strategy will you apply if the market is very competitive and there are lots of substitute products?​

Answer 1

a. Total Cost Function: The total cost function for Birat tea packaging company is given by: Total Cost = 8,000,000 + 80x + 15x + 10x + 20x = 8,360,000 + 125x

b. Total Revenue Function: The total revenue function for Birat tea packaging company is given by: Total Revenue = 160x

c. Total Profit Function: The total profit function for Birat tea packaging company is given by: Total Profit = Total Revenue - Total Cost = 160x – 8,360,000 - 125x = 7,225,000 - 125x

d. If you were the owner of the company, you would need to sell at least 58,000 Kgs of tea in order to reach neither loss nor profit.

e. If the market is very competitive and there are lots of substitute products, the Birat Tea Packaging Company can use a variety of strategies to stay competitive. These strategies can include offering discounts, loyalty programs, promotional campaigns, product diversification, and improved marketing efforts. The company should also focus on providing superior customer service to build and maintain customer loyalty. Additionally, the company should stay up-to-date on the latest trends in the industry and explore opportunities to collaborate with other companies to gain a competitive advantage.

Explanation: