Final answer:
The question relates to understanding profitability in a manufacturing company by analyzing the relationship between production costs and sales revenue. Without additional data, we cannot calculate the company's profit or loss.
Step-by-step explanation:
Understanding Manufacturing Company Finances
When analyzing the financial data from a manufacturing company, it is important to understand the relationship between the cost of production and sales revenue to determine profitability.
If the company's selling price is lower than the average cost per unit, the company will not be making a profit. In the example provided, the company is selling its product at $164 per unit, but without additional information on costs and production volume, we cannot calculate profit or losses.
For instance, in a hypothetical scenario where a company sells five units at $25 each, the total revenues would be $125. If the total costs of producing these five units are $130, the company would experience a loss of $5.
Similarly, if the average cost per unit is $26, and the price per unit is $25, with five units the firm would also have total losses of $5.
As for marginal costs, if they are $30 per unit and the price is only $25, then each additional unit produced is actually reducing the firm's profits, suggesting that production should be decreased.
These concepts are crucial for businesses to understand in order to make informed decisions about pricing and production levels to ensure profitability. They directly relate to a company's ability to generate profits, which is fundamental to its sustainability and growth.