HW chapter11

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Benedictine University *

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3301

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Economics

Date

Apr 3, 2024

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xlsx

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9

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Uploaded by ChefDragonflyPerson749

Modern Electronics a. Total Revenue = $ 705.12 Model Parameters for Qty Sold PRICE Constant Price A Price B b. A $ 18.00 20.00 -0.62 0.30 B $ 30.00 29.00 0.10 -0.60 NA=20-0.62PA+0.30PB NB=29+0.10PA- 17.84 12.8 2. Modern Electronics sells two popular models of wireless headphones, model A and model B. The sales of these products are not independent of each other (in economics, we call these substitutable prod- ucts because if the price of one increases, sales of the other will increase). The store wishes to establish a pricing policy to maximize revenue from these prod- ucts. A study of price and sales data shows the fol- lowing relationships between the quantity sold (N) and prices (P) of each model: NA = 20 - 0.62PA + 0.30PB NB = 29 + 0.10PA - 0.60PB a. Construct a mathematical model for the total revenue. b. What is the predicted revenue if PA = $18 and PB = $30?
QTY SOLD REVENUE TOTAL REV 17.84 $ 321.12 $ 705.12 12.80 $ 384.00 -0.60PB
MasterTech Net Sales $ 1,250,000.00 Cost of Sales $ 300,000.00 Gross Profit $ 950,000.00 Sales Expenses (fixed) $ 90,000.00 Sales Expenses (variable) $ 100,000.00 Percentage 8% Total Sales Expenses $ 190,000.00 Administrative Expenses $ 50,000.00 Net Operating Profit $ 710,000.00 Interest Expenses $ 8,000.00 Net Income Before Taxes $ 702,000.00 Taxes $ 351,000.00 Tax Rate 50% NET INCOME $ 351,000.00 20. MasterTech is a new software company that develops and markets productivity software for municipal government applications. In developing their income statement, the following formulas are used: gross profit = net sales - cost of sales net operating profit = gross profit - administrative expenses - selling expenses net income before taxes = net operating profit - interest expense net income = net income before taxes - taxes Net sales are expected to be $1,250,000. Cost of sales is estimated to be $300,000. Selling expenses have a fixed component that is estimated to be $90,000 and a variable component that is estimated to be 8% of net sales. Administrative expenses are $50,000. Interest expenses are $8,000. The company is taxed at a 50% rate. Develop a spreadsheet model to calcu- late the net income. Design your spreadsheet using good spreadsheet-engineering principles.
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Garage Band Expected Crowd 2500 people Average Concessions Expenditure $ 25.00 per person Fixed Cost $ 18,000.00 Ticket Price $ 20.00 per person REVENUE FROM TICKETS $ 50,000.00 CONCESSION SALES $ 62,500.00 PROFIT PERCENTAGE 80% BAND PROFIT $ (17,100.00) 21. A garage band wants to hold a concert. The expected crowd is 2,500. The average expenditure on concessions is $25. Tickets sell for $20 each, and the band’s profit is 80% of the gate and concession sales minus a fixed cost of $18,000. Develop a mathematical model and implement it on a spreadsheet to find the band’s expected profit.
Tanner Park Tickets Sold Price Adults 20,000 $18.00 Children 10,000 $10.00 Variable Cost per Person $3.00 Annual Fixed Cost $150,000.00 Ticket Revenue $460,000.00 Food & Beverage Revenue $60,000.00 Souvenir Revenue $25,000.00 Total Revenue $545,000.00 Variable Costs $90,000.00 Fixed Costs $150,000.00 Total Costs $240,000.00 Total Profit $305,000.00 24. Tanner Park is a small amusement park that provides a variety of rides and outdoor activities for children and teens. In a typical summer season, the number of adult and children’s tickets sold is 20,000 and 10,000, respectively. Adult ticket prices are $18 and the children’s price is $10. Revenue from food and beverage concessions is estimated to be $60,000, and souvenir revenue is expected to be $25,000. Variable costs per person (adult or child) are $3, and fixed costs amount to $150,000. Determine the profitability of this business.
New Product Sales Increase Per Year Inc SP Per Year Per Unit VC 6% $0.50 3% Year Sales Volume Selling Price Unit Var Cost 1 80,000 $ 12.00 $ 3.00 2 84,800 $ 12.50 $ 3.09 3 89,888 $ 13.00 $ 3.18 NPV $366,168.81 Discount Rate 4% 28. For a new product, sales volume in the first year is estimated to be 80,000 units and is projected to grow at a rate of 6% per year. The selling price is $12 and will increase by $0.50 each year. Per-unit variable costs are $3, and annual fixed costs are $400,000. Per-unit costs are expected to increase 3% per year. Fixed costs are expected to increase 8% per year. Develop a spreadsheet model to predict the net present value of profit over a three-year period, assuming a 4% discount rate.
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Per Unit FC 8% Fixed Cost Total Rev Total Costs Total Profit $ 400,000.00 $ 960,000.00 $ 1,200,000.00 $ 240,000.00 $ 432,000.00 $ 1,060,000.00 $ 1,334,880.00 $ 274,880.00 $ 466,560.00 $ 1,168,544.00 $ 1,484,920.51 $ 316,376.51
Minimart What is the to Number of copies 25 purchased demand 5 Purchase Cost $ 1.50 10 Sales Price $ 4.00 15 20 Demand 20 Number Sold 20 Number Left Over 5 YOU DON'T H Total Cost $ 30.00 Total Revenue $ 80.00 Total Profit $ 50.00 45. A gasoline mini-mart orders 25 copies of a monthly magazine. Depending on the cover story, demand for the magazine varies. The mini-mart purchases the magazines for $1.50 and sells them for $4.00. Any magazines left over at the end of the month are donated to hospitals and other health care facilities. Modify the newsvendor example spreadsheet to model this situation. Use what-if analysis to investigate the financial implications of this policy if the demand is expected to vary between 10 and 30 copies each month.
otal profit when demand equals the quantities listed below? total profit $ (17.50) $ 2.50 $ 22.50 $ 42.50 HAVE TO PERFORM WHAT-IF ANALYSIS!!!!!!!!!
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