A firm is manufacturing the new product. The firm expects a linear function for its revenue on the product. Their staffs, however, didn't properly consider how the cost function would vary as a function of production rate. As a result, the firm was losing money at a high production rate. Therefore, you can describe this point to most likely be: a) Past the profit limit b) before reaching the break-even point c) The point after which the total revenue equals the total cost d) a and b

A firm is manufacturing the new product. The firm expects a linear function for its revenue on the product. Their staffs, however, didn't properly consider how the cost function would vary as a function of production rate. As a result, the firm was losing money at a high production rate. Therefore, you can describe this point to most likely be: a) Past the profit limit b) before reaching the break-even point c) The point after which the total revenue equals the total cost d) a and b

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 35P

See similar textbooks

Similar questions

Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand will grow at 5% a year. If the company builds a plant that can produce x units of Wozac per year, it will cost 16x. Each unit of Wozac is sold for 3. Each unit of Wozac produced incurs a variable production cost of 0.20. It costs 0.40 per year to operate a unit of capacity. Determine how large a Wozac plant the company should build to maximize its expected profit over the next 10 years.
It costs a pharmaceutical company 75,000 to produce a 1000-pound batch of a drug. The average yield from a batch is unknown but the best case is 90% yield (that is, 900 pounds of good drug will be produced), the most likely case is 85% yield, and the worst case is 70% yield. The annual demand for the drug is unknown, with the best case being 20,000 pounds, the most likely case 17,500 pounds, and the worst case 10,000 pounds. The drug sells for 125 per pound and leftover amounts of the drug can be sold for 30 per pound. To maximize annual expected profit, how many batches of the drug should the company produce? You can assume that it will produce the batches only once, before demand for the drug is known.
A major oil company is considering the optimal timing for the construction of new refineries. From past experience, each doubling of the size of a refinery at a singlelocation results in an increase in the construction costs of about 68 percent. Furthermore, a plant size of 10,000 barrels per day costs $6 million. Assume that thedemand for the oil is increasing at a constant rate of two million barrels yearly andthe discount rate for future costs is 15 percent.a. Find the values of k and a assuming a relationship of the form f(y) kya.Assume that y is in units of barrels per day.b. Determine the optimal timing of plant additions and the optimal size of each plant.c. Suppose that the largest single refinery that can be built with current technology is 15,000 barrels per day. Determine the optimal timing of plant additionsand the optimal size of each plant in this case. (Assume 365 days per year foryour calculations.)
profit function for a skateboard manufacturer is given by P X is equals to 30 x minus 3 x square - 250 find the exact profit from the 13th create board
As a prospective owner of a club known as the Red Rose, you are interested in determining the volume of sales dollars necessary for the coming year to reach the break-even point. You have decided to break down the sales for the club into four categories, the first category being beer. Your estimate of the beer sales is that 32,000 drinks will be served. The selling price for each unit will average $1.50; the cost is $1.25. The second major category is meals, which you expect to be 10,000 units with an average price of $12.50 and a cost of $6.00. The third major category is desserts and wine, of which you also expect to sell 8,000 units, but with an average price of $2.25 per unit sold and a cost of $1.25 per unit. The final category is lunches and inexpensive sandwiches, which you expect to total 24,000 units at an average price of $6.50 with a food cost of $3.75. Your fixed cost (i.e., rent, utilities, and so on) is $1,600 per month plus $2,200 per month for entertainment.…
As a prospective owner of a club known as the Red Rose, you are interested in determining the volume of sales dollars necessary for the coming year to reach the break-even point. You have decided to break down the sales for the club into four categories, the first category being beer. Your estimate of the beer sales is that 30,000 drinks will be served. The selling price for each unit will average $1.50; the cost is $0.75. the second major category is meals, which you expect to be 10,000 units with an average price of $10.00 and a cost of $5.00. The third major category is desserts and wine, of which you also expect to sell 10,000 units, but with an average price of $2.50 per unit sold and a cost of $1.00 per unit. The final category is lunches and inexpensive sandwiches, which you expect to total 20,000 units at an average price of $6.25 with a food cost of $3.25. Your fixed cost (i.e., rent, utilities, and so on) is $1,800 per month plus $2,000 per month for entertainment. What is…
As part of their application for a loan to buy Lakeside Farm, a property they hope to develop as a bed-and-breakfast operation, the prospective owners have projected: Monthly fixed cost (loan payment, taxes, insurance, maintenance) $6000 Variable cost per occupied room per night $ 20 Revenue per occupied room per night $ 75 Write the expression for total cost per month. Assume 30 days per month. Write the expression for total revenue per month. How many rooms they need to sell per night in order to break even? Suppose 5 rooms can be sold per night, how much they should charge per night in order to breakeven?
Perdaris Enterprises had an expenditure rate of E′(x) = e0.1x dollars per day and an income rate of I′(x) = 98.8 - e0.1x dollars per day on a particular job, where x was the number of days from the start of the job. The company’s profit on that job will equal total income less total expenditures. Profit will be maximized if the job ends at the optimum time, which is the point where the two curves meet. Find the following.(a) The optimum number of days for the job to last(b) The total income for the optimum number of days(c) The total expenditures for the optimum number of days(d) The maximum profit for the job
For Lodes Company, the relevant range of production is 40–80% of capacity. At 40% of capacity, a variable cost is $4,000 and a fixed cost is $6,000. Explain the behavior of each cost within the relevant range assuming the behavior is linear.
A company has invested in an online tool that is expected to generate a continuous revenue at a rate that increases 252 thousand TLs per time period t (t= 0 is when the tool begins to function). A continous promotion cost (in thousand TLs) function for 578 time periods, C(t), is also derived for the machine, C(t) = -t2 + 578t. Find out when the tool starts to generate more revenue than cost per time period
Assume the demand for a company’s drug Wozac during the current year is 50,000, and assume demand will grow at 5% a year. If the company builds a plant that can produce x units of Wozac per year,it will cost $16x. Each unit of Wozac is soldfor $3. Each unit of Wozac produced -incurs a variable production cost of $0.20. It costs $0.40 per year to operate a unit of capacity.Determine how large a Wozac plant the company should build to maximize its-expected profit over the next 10 years.
You are thinking of opening a small copy shop. It costs $5000 to rent a copier for a year, and it costs $0.03 per copy to operate the copier. Other fixed costs of running the store will amount to $400 per month. You plan to charge an average of $0.10 per copy, and the store will be open 365 days per year. Each copier can make up to 100,000 copies per year. a. For one to five copiers rented and daily demands of 500, 1000, 1500, and 2000 copies per day, find annual profit. That is, find annual profit for each of these combinations of copiers rented and daily demand. b. If you rent three copiers, what daily demand for copies will allow you to break even? c. Graph profit as a function of the number of copiers for a daily demand of 500 copies; for a daily demand of 2000 copies. Interpret your graphs.