Case Study : Leather Shoes Company Essay

957 Words4 Pages
Shan Huang 11440964 Math 202-03 Mindy Morgan Marginal Analysis Excel Leather Shoes Company Excel Leather Shoes Company (ELS) is my company and it manufactures and sells leather shoes. The leather shoes are differentiated in the kind of shapes, and outlook and this enables to meet the demands and preferences of different customers. The variable cost per pair of the leather shoe is $30. These varieties that I sell have elegant shape and are highly recommendable outfit as an official wear. SLE has fixed production costs of $4000 per month, so my cost function is C(x) = 4000 + 30x. On the instances where there is limited availability of funds, I would still be able to calculate the highest number of units that the business would be able to produce using the available resources. In our case, the ELS business does not have a limited budget. In case there was a budget limit, for instance, we assume that limit budget is $160,000, the highest number of units that the company would be able to produce on a monthly basis would be limited to 5,200 units. The highest number of units that company would be able to produce is computed as follows, $16000 = $4000+30x, in this case x represents quantity = 5200 units. Conventionally, total revenue is computed through finding the product of Price per unit and the total number of units sold that is R(x) = x*[p(x)]. Given that the price demand equation was x= f (p) = 12,000 – 75p, then the function of the total revenue would be R(x) = (12,000x

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