Pricing and Production Decisions at Poolvac, Inc.

d) Break even sales change that would change the profits by the same amount as a reduction in price.

1.) What is the marginal cost estimate of the Phase 4 hospital services, assuming that 60 percent of the designated costs are fixed and the remaining costs are variable?

The rise in revenue was rapid starting from the year of operations. The key period of business was from April to September were revenues were equal to 65% of total revenue as the product was seasonal. The basis of forecasting for the year 1981 & 1982 is the expectations of sales by Mr. Turner & Mr. Rose. It is given that total sales were $ 15.80 million in first half of year 1981 and the total sales in 1981 to reach $ 30 million. Profit after tax was expected to be $ 1 million for 1st half and we assumed for the next half, profit will be in proportion to first half & expected to be amounting to $ 0.90 million. For year 1982, the sales expectation by Mr. Rose was around more than $ 71 million &

B. 1. The impact of costs on the decision to move forward with the new Maui Sandal line is as follows: As the production continues, the hours needed for each batch, or individual pair, will begin to decrease. By continuing to produce this line the total labor costs will continue to decrease, but most likely, at a slower rate as more sandals are produced. This data can help the company decide employment levels, capacity, costs, and their pricing of this particular merchandise in the open market. The company predicts that it will take 1,000 labor hours for production to complete for the first batch, with 50 total batches between month 1 and month 4.

a) An importer of antiquities knows that he can sell bowls and carved figurines to the domestic market. If q1 is this number of figurines sold, their price will be $(60 − 2q1 ). If q2 bowls are sold, $(10 − q2 ) will be the price of bowls. Figurines cost $16 and bowls $4 to the importer and fixed costs are $200. i) How many each of figures and bowls should be sold to maximise profit. ii) Is this indeed a maximum? Justify using second order conditions. iii) What price is

The budget analysis shows that the labor hours of the firm are higher than the budgeted amount. As such, the firm needs to evaluate the cost benefit analysis of making or buying their products. To make this decision, various factors need to be considered. Before making the decision, Peyton needs to evaluate the marginal costs and revenue of making versus buying the products. The firm should take the option which provides the highest marginal profit which is the

include a graphical representation of the data and information used in your analysis. III. Examine the price elasticity of demand for the product(s) your firm sells. a) Analyze the available data and information, such as pricing and the

In our second assumption, instead of using the cost of goods per cases in 1986, we try to use the percentage it counts in the total expenses which is 50.4% and to find the sales needed to break-even. The detail of the calculation is shown in the answer for questions d. The result is that 95,635, a little bit higher than the estimated sales of 90,000.

Assess how the type of market structure impacts your chosen company’s financial performance as measured by performance variables over the past three years. Support your response with data and graphs illustrating two performance variables of your choosing (e.g., sales, net income, stock price) over time.

The new owner of a beauty shop is trying to decide whether to hire one, two, or three beauticians. She estimates that profits next year (in thousands of dollars) will vary with demand for her services and has estimated demand in three categories low, medium and high.

* Use the profit maximization rule MR = MC to determine your optimal price and optimal output level now that you have market power. Compare these values with the values you generated in Assignment 1. Determine whether your price higher is or lower.)

Using MINITAB perform the regression and correlation analysis for the data on SALES (Y) and CALLS (X), by answering the following questions:

a) Profits. From profit angle, the scenario is straightforward, at any given volume, based on the estimation from the financial director, the profit would be higher by keeping the price at FF20. In fact, as per presented projection, FF15 will never reach BEP and won’t make profit at all (in fact it makes loss), while FF20 will always produce profit, even at the suggested very low volume (which

The estimate of total potential market for heater/blower unit is 2737 units and 2737000 units for blankets (see exhibit 1). The direct cost of the heater/blower unit would be $380 and $0.85 per blanket. The initial investment, $500,000, for this system would cover the fixed cost of the company during first year of operation. Based on this basic information and other considerations, the company has to determine its pricing strategy for both

Explain how the demand curves for normal products and for prestige products differ, what are demand shifts and why are they important to marketers? How do firms go about estimating demand? How can marketers estimate the elasticity of demand?